The current economy has cause many people to have loans that they can't afford to repay. The banks are not usually willing to continue with the loan if they are not getting the monthly payments.
I have been working with a company for about a year now that sends me on assignments to visit with homeowners that are behind on their payments. This has given me some excellent experience in dealing with mortgage companies. The process is like this--
Most people are hesitant to talk with me at first but when they realize I really am there to help, they seem to appreciate the help I am offering. We discuss their situation and what caused them to get behind on the mortgage. I get a financial form filled out showing their income and expenses. Together, we call the mortgage company to see if we can get a loan modification based on their financial situation. Sometimes this takes a few days and other times, the company will let us know right away. If I need to follow up with the mortgage company, I ask the owner to sign an authorization form to give me permission to discuss their account.
If the owner has no income to make the payments, we can put the house on the market at a price that will cause the house to sell. I do extensive research to determine an appropriate list price then start the marketing process. Once we get an offer, I submit several documents to the mortgage company, including the financial statement, proof of income, a hardship letter from the owner (borrower), the purchase offer, comparable listings and sales for the area and an estimate of funds that the lender will receive.
After everything is submitted, it can take up to 4 months to get approval for the sale to go through. If the foreclosure notice goes in the newspaper, we can have foreclosure postponed to allow for the short sale approval.
This is an excellent option for owners that can't make the payment. The bank elimiates the time and expense of foreclosure, the buyer gets a good deal on a house that is usually in better shape than a foreclosed home, and the owner typically has a negative impact on his credit score for 18-24 months -- much better than a foreclosure.