In a Short Sale the Lender(s) require an "arms-length" transaction. The property may not be sold to anyone the seller has a close personal or business relationship with including family, friends, or in some cases, even neighbors. The Seller normally signs a paper that confirms this is not the case.
As a side note, if you are considering a Loan Modification and are wondering if itâ€™s worth the time to explore your options there is one data point you might reference: http://docs.Steven-Anthony.com/LoanModStats.pdf Page 2 of this document shows which lenders/servicers have the best â€œloan mod conversionâ€ rates. I do want to caution you that Loan Mod Approvals are becomming more common.
If you are looking for details of what is required in order to have a loan modification granted see:
Since there are still a number of shady companies offering LM services, I have included a link to HUD-approved counseling agencies at the top of the page.