Short sales are for people that need to sell not for people that only want to sell. Unless a person has a specific financial issue that the bank will accept as a hardship, a short sale will not be negotiated. (See a list of acceptable hardships in my previous blog.) The seller must not be able to Pay Down his mortgage. A short-sale homeowner must be financially insolvent. For the purposes of a short sale this means that he has to owe more than he has or that the owner does not have liquid cash assets that could be used to buy-down the mortgage. If the owner does have liquid cash or assets they will be expected to use them to pay down their mortgage.
While negative credit items fall off of an individual's credit report after 7 years, the one question that is asked on every mortgage applications "Have you ever had a foreclosure?" This item has staying power and will follow a person around indefinitely.
Another consequence of a short sale is that there are possible tax consequences and losses may be subject to a Deficiency Judgement.
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