One way to look at a short sale is to imagine being a teenager again. 
 

 A short sale is a lot like having a parent involved.  Because the bank is agreeing to pay off any amount that you are short, the bank gets a say. Just like mom and dad did.
 You still get to control most of the aspects of selling your house but the final decision is up to the bank. 
After all, it’s their money.
 

There is no such thing as a “standard” short sale. 
Each bank or workout trustee is different.  The owners they represent are different.  Just about every lender uses different forms and ask for different information. 
Even if you get to use the same bank – you never seem to get the same people.  However, they all have some common motives – cost control and controlling second-guessing.
 

 Banks are subject to regulation and subject to oversight.  They need to be able to provide proof to auditors, bank regulators, mortgage owners and others  – that they did a good job.  So get ready! The bank will ask for all sorts of information for their files.  Even if the person you’re dealing with is convinced that you should be offered the opportunity to do a short sale, he still needs to cover himself and ask questions, ask for documents and fill up the file.  It's just the way it is.

 Typical steps in a short sale

 Once you fall behind on your payments, the service of your loan will start contacting you to ask for payment.  Start keeping a file of all your contacts. Make a file and start a log.

 If you are going to look into refinancing or renegotiating the terms of your loan – now is the time to start.  Ask the servicing representative to give you a contact and call that person.  As we’ve discussed, this may not work if your credit has been damaged.
 
Once you’ve determined that you can’t sell your house for enough money to pay off the debt, you need to start working on negotiating a short sale.  Contact your lender service and tell them that you need to sell your house because you can’t afford the payments.  Also tell them that it looks like the proceeds will not cover the debt and you will be short. 

 They may moan, they may groan and they may threaten.  Be calm and ask if they have a short sale program.  They all do, eventually.  Some are listed right on their web sites.  Get all contact phone numbers,
 Some banks choose to get involved in the process early.  They will ask you to submit a “short sale package”.  This will include everything they need except for the final offer.  Although they can only make a final decision after receiving an offer, they can review your information and let you know if you have any qualification problems.  This discussion assumes that the bank will accept the background information early.
We do not recommend that you do this as your information can change, and now they have cause to deny your short sale.

 Other banks choose not to become involved early.  They will tell you to try and sell the property but they will proceed with the foreclosure. 
If you get an offer before they foreclose they will consider a short sale.  They only accept a “short sale package” if it contains an offer.  If that is the case, we will submit all the information at once.  The bank will then review your information and evaluate the offer.  This can result in significant delays.   We will help your to assemble the “short sale package” information as soon as possible.  You want to be able to send the package and the offer the same day you receive the offer.

 The loan service department may not be the organization responsible for working with short sales.  They may refer you to the actual owner of the loan, or someone authorized to work on their behalf.  We’ll continue to call this organization “the lender”
 

 You will be asked to write a “hardship letter” before they send you any information. Remember, the bank is building a file and wants to prove that you asked for help. 
Be direct, brief and truthful.  You don’t need to go into detail about your financial situation – just that you can’t pay. We will assist you in the letter process.
  The bank will get all the financial details later. Provide your loan number.  If you have other conditions such as a job loss or medical conditions, mention them but don’t go on and on.  The bank has heard every story.  ASK FOR HELP – BE SPECIFIC.  If your goal is to be allowed to participate in a short sale with the bank funding the shortage and forgiving the debt – ask for that specifically.  Give them an idea of what the funding may be – “The realtor said the house will bring around $375,000 and my debt is $430,000, so the shortfall maybe over $55,000”.
 

 If you’re current on your loan but know you can’t make payments in the future, you may be told that the bank only offers short sale options to delinquent customers.  Don’t believe them.  Ask to speak to someone else.  Explain, that although it will be easy to stop making payments, (that’s why you called in the first place) any delay in getting started will cost them money.  Fact most lender will only look at files that are two month owed in rears.
They also want to see an effort made by you and your realtor, that your tried to sell the home at retail price. so start early.

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