First, what is a short sale? It is nothing more than a lender discounting a mortgage. Usually, it’s in lieu of foreclosing but not always. Banks, however, call it a short sale versus just saying discount. I say not always because in this down market, there are many sellers that are current on their mortgage, have to sell and what they will get on the open market will not be enough to satisfy their loan (s).
I’m working with a seller right now, for example, as an agent - not as an investor - and we’re going to get about $20,000 less for their home than they owe. What I instructed them to do was to contact the mortgage company (if late on payments, the Loss Mitigation Department), get ahold of the contact that handles short sales and then forward a hardship letter explaining the situation. So, current or not and foreclosure or not, many banks will work with short sales.
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