My husband and I are Realtors in SW Florida. We are getting calls from desperate homeowners who are behind on their mortgage payments and understand that foreclosure is just about the worse thing that can happen to their credit rating.

With the economy such as it is more and more people are suffering from the above scenario. First thing we advise is to speak with an attorney about a short sale. For those who are unfamiliar with the term I will explain.

A short sale exists when a lender or lenders allow the property to be sold short....or less than the mortgage balance. As your advisor will tell you, your credit WILL be compromised, however not to the extent that a foreclosure will.

Lenders will require your financial information including, but not limited to, your income tax return, bank statements, profit and loss and a hardship letter. The process is somewhat easier when the property is your primary residence, though lenders are allowing second homes and investment properties to be short. Many owners believe that they must move out. That is not true. You can live in the residence during the process.

Lenders require that you hire a Realtor to market your property. Most lenders will take or even require multiple offers and some have their own forms that need to be signed. NOT all buyers will be accepted even though the owner signs the sales agreement. The most important information for the buyer to know is that the lender can take offers up until the day of closing and will accept what they deem to be the highest and best offer. If you, the buyer, have spent money on inspections, condo applications, homeowner applications, etc. that is a chance you are taking to ultimately get an extraordinary deal.

Now the big question for the owner is, can the lender/lenders get a deficiency judgment against you and how long will it last. This has much to do with the State in which you own the property. Some States such as California are anti-deficiency States. We suggest that you speak with your attorney for the answer.

Pres. Bush instituted a temporary law that the deficiency will not be taxable income. You may or may not receive a 1099 from your lender/lenders. Another question for your attorney or accountant. What you should do if/when a deficiency judgement appears in your mail.

Be aware that the short sale process is an ongoing and changing situation. I will keep you informed to the best of my ability.

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or e-mail:  sharon@marcoarea.com