Thanks everyone, I appreciate the rapid response.
The reason I asked the question is that I have been told by two short sale attorneys -- in different states -- that I did not need to prepare a hardship letter, or to present financials. Wow! This is contrary to nearly everything I have read or heard about the short sale process.
One on-line legal firm said that no letter or financials are required because nearly all lenders recognize that fatal errors were made in the loan application process during the frenzy of the real estate bubble, and that those errors could form the basis of a class action law suit if the lender failed to agree to a short sale. Lenders therefore get scared off by that threat and agree to the short sale. Thus their approach to lenders: you sign or we sue.
The second attorney did not provide a reason for not writing a hardship letter or for not providing financials, but he did mention that AZ is a non-recourse state, meaning that in the event of a foreclosure the lender cannot go after the seller's income or assets directly for the unpaid balance, the lender can only collect the property sale proceeds; only the property (not personal income or wealth) is considered collateral.
So what Tonje says makes sense. at least in my case. Since AZ is a non-recourse state, and I have non-recourse purchase money mortgages, the lender would have little or no chance of recovering the deficiency if there were a foreclosure, so the mortgagor might as well proceed with the short sale.
In that case I assume my lawyer would need to obtain a written waiver from the lender stating that the lender would NOT try to collect the deficiency, as a necessary condition of the short sale, otherwise we would simply let it proceed to foreclosure.
By the way, the second attorney did state that he was familiar with my specific lender and that that lender absolutely would not consider a short sale unless the payments were 90 days delinquent. So, in my case, being a nice guy and continuing to make mortgage payments while the short sale is in the works simply is moot. (This seems to be a lose-lose; it hurts both my credit and the lender's bottom line, but what do I know?)
Like Jim Mitchell below, and from the little I have learned, I have come to the conclusion that every case is different -- so let the seller beware.
For example, in some states (like AZ) the non-recourse provision currently applies to short-sold rental properties as well as to primary residences. However, this can easily change at the whim of the AZ legislators who are being heavily pressured by the banking industry to change the law - again.
Also, if there is a second mortgage involved, the type of second makes a difference; if the second was used to purchase the property (e.g., as part of the down payment) it is considered a purchase money mortgage aqd is non-recourse, but if it was a home equity loan, it can be recourse even in a non-recourse state.
Also, as I just learned, the deficiency from s short sale is not federally taxable as a gift if the property is a primary residence, but is taxable if it is a rental property.
I'm sure there are a zillion other Ifs, Ands, & Buts.
In light of all these variables, it certainly seems wise to use an experienced short sale local lawyer in conjunction with an experienced short sale local agent, and a tax person familiar with short sales as well, to make sure that ALL the legal and tax consequences are considered before proceeding. A short sale is NOT something to go into carelessly, especially in light of the potential effect on one's credit - and one's pocketbook.
PS: I am neither a lawyer nor an agent, I'm just regurgitating the little I have so far learned about the process before I jump into the cold short sale water. For my sake and that of others who may come across this, I ask the professionals to please correct any misstatements!