Short sale approval requires working with your lender's Loss Mitigation Department. Obtaining short sale approval can be a lengthy and complex process. It involves many steps and consists of a trail of paperwork.

When lenders accept short sale approval transactions they agree to accept a lesser amount than owed on the mortgage balance. A Loss Mitigator is assigned to oversee your account and review your financial situation to determine if you are eligible to apply for a short sale transaction.

To following eligibility requirements will help you determine if you are a good candidate for short sale approval:

1) You must provide proof your home is worth less than the unpaid balance. This can be accomplished by obtaining a comparable home sales report of houses sold or up for sale in the area where you reside. Comp reports can be obtained through Realtors or by conducting research via the Internet.

2) You must be in default on your mortgage note a minimum of three months. Additionally, the majority of lenders only consider short sale approval if you do not have any equity in your home. If you have equity or financial assets you can draw from to become current on mortgage payments, chances are your lender will not agree to a short sale approval.

3) You must provide proof you are facing financial distress due to hardships including extended unemployment, chronic health problems, bankruptcy, death or divorce.

4) You must prove you have no financial assets you can borrow against to maintain your mortgage payments.

Prior to granting a short sale approval, your lender will generally offer you a variety of options to save your home from foreclosure. Typically, this will include a Loan Modification where the Lender will roll over delinquent mortgage payments to the end of the loan. Some lenders will reduce or temporarily suspend mortgage payments for a specific period of time.

There are several options available to homeowners who want to keep their home out of foreclosure. Each options comes with their own set of pros and cons. Before accepting a loan modification, deed in lieu of foreclosure or short sale, it's vital to investigate all options and determine the best financial decision for you and your family.

Once you decide to move forward with short sale approval, certain elements must be in place. In most cases, your Lender will require you to have a Buyer lined up. This can be accomplished by working with a Realtor or private real estate investor who is qualified to handle short sale real estate transactions.

A short sale package must be provided to your lender. Although requirements vary from lender to lender, most will require the following information:

• Detailed financial statement outlining income and expenses
• Short sale hardship letter explaining the events that caused you to become delinquent in mortgage payments
• Current bank and investment statements
• Current year tax return
• Realtor listing agreement
• Signed sales contract
• Estimate settlement statement (HUD-1)
• Proof of buyer's financing

Engaging in the short sale approval process requires patience, tenacity and organization skills. Expect to engage in multiple phone conversations to reach a final agreement. Most importantly, do not provide false information or attempt to sugar-coat your financial situation.

Short sales are far less damaging to your credit and less traumatic than the foreclosure process. However, engaging in a short sale approval will not allow you to keep your home. It simply allows you to sell it and move forward in your life.

It is highly recommended to thoroughly educate your self about the short sale approval process and work with qualified individuals who are well-versed in this type of real estate transaction. Short sale experts include Realtors, Real Estate Attorneys, Short Sale Specialists and Private Real Estate Investors.

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