Just my two cents.
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REALTORÂ®| Century 21 Elite Home Finders
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There is no rule of thumb on the percentage of debt owed as to when a lender will allow a short sale, as it is up to the lender whether or not to "bless" a short sale. As long as a notice of default has not been filed and foreclosure proceedings not yet begun, you should call your lender to discuss whether or not it would allow a short sale. Before you pick up the phone you should speak with a Realtor and be aware of the current value of your home and have a list of comparable sold properties in your neighborhood.
Keep in mind that your lender does NOT want to be stuck with another home, so if you argue a strong case that your Realtor is going to price your home right and work hard to get it sold, most lenders will give you their blessing to do so. Remember to GET THIS IN WRITING from your lender. You will also need to give your written permission to your lender that will allow your agent to contact the lender and discuss your loan and sale of your home throughout the selling process. Find an aggressive agent who knows how to speak with lenders and is willing to be in constant communication with your lender.
You should keep a dated log and write down all your communications with your lender, and any pertinent changes should be received in writing before proceeding. I have written a book entitled Mortgage Walkaway Options that discusses options to foreclosure. You can find it at http://www.MortgageWalkawayOptions.com. It is a terrific resource for anyone who needs to get educated and understand possible options. Best of luck to you.
With todays market in decline the ever changing values are a major part of a short-sale. How much underwater is a good question.
The Mortgage(s) remain as a constant against value that is declining which widens the gap. The lender wants to get the most they can for the property and sometimes going into forclosure can net more than a short sale, That depends on the note.
There is no hard and fast formula as each leander is different.