For owners who can on longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of these options is called a Short Sale.

When lenders agree to do a short sale it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more sense to foreclose; moreover, not all sellers or properties qualify for short sales.

If you are considering buying a short sale, there could be drawbacks. For your protection we suggest that you obtain legal advice from a competent real estate lawyer and call a CPA to discuss short sale ramifications.

Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007 be aware that the IRS could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid.

Most importantly, work with a Realtor that is experienced in Short Sale transactions and can help guide you through this process.