I already have a few articles about short sales. This subject fascinates me the most, because regardless of the name "short sale" it actually gives you more time to stay in your home. If you know how to play your cards wisely, you will be pleased with the results. During the process you will learn more and respect yourself more. Your self-esteem will be higher. I will go through the steps one more time to avoid confusion.
1. The first three months of delinquency. Contact the bank, explain the situation and sent the paperwork requested. They will keep calling, but stay calm. Know when is the time to talk and when not to talk.
2. By the end of the beginning period, you should have arranged a forbearance agreement. Some banks allow up to six months free of payments. Some require partial payments during this time. Never agree with repayment plan (meaning to catch up with the missed payments). The forbearance agreement will move the missed payments to the rear of the loan.
3. Initiate a short sale. Do not speak with the customer service department about this matter. They even do not know what this term means. Ask for the Loss Mitigation department. Always be extremely polite when talking to the representative. Bring emotions to the conversation. Befriend them. Be prompt with the paperwork requested. The first requirement for the short sale is a buyer. You can list with a real estate agent, but it is only to demonstrate some activity before the bank. Be responsible and find a buyer through you local newspaper.
4. Be clear what you want. If your goal is to stay in the house, do you really want the short sale offer to be accepted? If you understand what I mean, act accordingly. You can reopen the case after a rejection. Find another buyer and repeat.
5. Bankruptcy is a very slippery matter. I cannot give you a legal advice. However, when all of the options are exhausted, consider talking to a bankruptcy attorney. You can file Chapter 13, and the process could drag on for many months. When you fall out of Chapter 13, then you can roll into a Chapter 7. I never advocate bankruptcy, but sometimes it is the only way to stop the public sale. Again, consult a bankruptcy attorney.
As a conclusion, I recommend to use all of the tools mentioned to your advantage. I have not discussed the loan modification program recently launched by president Obama. If your finances show improvement and you can make the new payments, go for it. My point is that when worse comes to worse, there is still one more phone call to be made.