I would only add that WAMU approved an inordinate amount of Option-ARM loans during the '03-06 run-up in local real estate. Therefore, we know they are hard hit with foreclosures and they expect the numbers to increase even further. A short sale BENEFITS the lender of record, avoiding bad debt on their books. The lenders are not in the business of owning real estate. If you are willing to wait out a short sale, you stand to save 10-15% or more on your home purchase. This is a very insightful question, yet every transaction seems to take on it's own permutations and individual nuances. I would avoid a Short Sale with a different 2nd mortgage holder if you don't want any surprises at the end.
Unfortunately, as with just about anything you do with a lender, it all comes down to who you are working with at both ends. Both the listing agent and the negotiator have to be experienced and willing to go the extra mile to get the deal done. All communications need to be complete and succinct. The listing agent has to follow the three P's. Be Pleasant without being a pushover, be Patient without allowing time to be wasted, and be Persistent, stick to a schedule of calls and follow up.
At this time, I would also question if the recent troubles at WaMu and the new bail out package will have any impact on the Short Sale process. That is yet to be seen. Dare to Dream
Real Estate Consultant
RE/MAX Palos Verdes Realty