Probably by now you or someone you know had some financial crisis and had to go through a loan modification process or short sale and some of you a foreclosure. To short sale your home is to cut a deal with the bank, so the bank forgives some of your debt, therefore you can sell your home for less than you owe. So far so good, right? Wrong.
Most homeowners who thought that by finding a great realtor from a good real estate company(Coldwell Banker) in Los Angeles CA or anywhere else in America they're debt will be gone. What most homeowners don't know is that banks don't really approve many short sale homes or loan modification because you need to actually qualify for both.

Why lenders give hard time to homeowners in times like that?

In most times it's not really the lenders fault.  Realtors or should I correct my self "Inexperienced Realtors and/or Inexperienced Loan Officers", are at fault.  Many real estate agents out there don't know what to do because to sell a home through a person that is just trying to make some money from his/her property or just relocate and to sell a home through a corporation that needs to ignore large amounts of money in order to sell, there is a big difference. Also inexperienced real estate agents who fail to turn incomplete paperwork also are causing holdups, so by the time you get to open escrow you are finding out that your house already has been sold under a trustee sale. The problems has become such a kink in the market's recovery that lenders and the federal government are launching new efforts this month to simplify and speed up the short-sale process.

Just 25% of short-sale offers that homeowners receive from potential buyers actually close, according to a February study of 1,300 realtors in Los Angeles CA. More than 90% of agents cited a slow response from the lender as the main reason to why short sales were lost.
The hold up on homes is a real problem, now it's a serious issue. Look, many short sales are not closing escrow and it's contributing to the crisis. The number of Foreclosures is just getting higher and higher.

Let me give you an example:

Mr Cohen is in the process of a short sale for longer than 8 months. Mr. Cohen still lives in his house that is located in Sherman Oaks California without paying the mortgage and the bank had a trustee sale scheduled 3 times and then postponed. He had so many offers and escrows open and close because buyers just loose their patient (I can understand them). Mr Cohen received offers higher than fair market value at the time, but Washington Mutual (Wamu) rejected the offers. The BPO was done months later and buyers just started looking at other properties in Sherman Oaks, Studio City, Valley Village and North Hollywood since they've lost patience. Washington Mutual makes it so difficult for Mr. Cohen to short sale his home and he's still wondering if this ordeal is ever going to end.

What was the main reason of not closing on time?

THE REAL ESTATE AGENT!!!

Washington Mutual's representative said that he didn't get all the correct documentation on time and that he’s still missing some documents. Now the lender will ask for updated financial information since it has been so long and to get today's fair market value of the property.
You want to hire the right real estate agent. Make sure your real estate agent has experience in short sales, look at his records. Did he ever short sale a home for someone, does he really know the process of a short sale, does he want to go through this long process? after all it is a much longer process than a normal sale.
At one point short sales were extremely rare. But now, with the unemployment rate climbing and home values going down, more homeowners are pursuing short sales when they can't afford their mortgage. About 11% of all home sales transactions in June are such short sales, according to the NAR.

Some delays stem from agents who fail to prepare buyers and sellers for the length of time it takes to get a short sale approved or who supply incomplete information to banks.
But many short sales are faltering, largely because several lenders may lack the internal staffing, expertise and systems to process such sales in a timely fashion. And short sales can be complex, especially if they involve line of credit or other second liens held by different mortgage lenders, who as well must agree to take less than the amount they're owed from a home's sale.

Several lenders acknowledge that banks have been part of the problem, in part for the reason that the majority have done so few short sales in the past that they've faced a steep learning curve.
"Most short sales never close. Its a lost opportunity, and we need to increase the rate in which we close them"  Uncompleted short sales that go to foreclosure cost more to lenders and homeowners.
For homeowners, a foreclosure will damage their credit for as long as 7 years. A homeowner who has gone through a short sale typically can get a new Mortgage in two to three years typically according to the NAR.

Borrowers are projected to pay their Loan throughout the short-sale process, but not all borrowers can afford to pay it off. That leads to abandoned properties that can sit vacant and deteriorate for months. In other cases, homeowners unable to make their mortgage payments may stay put and pay nothing, in some cases for up to a year, until the lenders' review-and-approval process plays out.
The Obama administration's housing rescue plan, which includes getting Lenders to modify home loans into more affordable mortgages, has made such slow progress that representatives from 25 major mortgage servicers were called to Washington, D.C., last month to discuss improving the efforts.

Short sales are Becoming the national spotlight now:

•Mortgage servicers ramp up their programs. Chase has begun trying to slash the turnaround time on short sales from up to 90 days after a buyer submits an application to only 7 days. In a standard short sale, a buyer makes an offer, then the bank conducts appraisals to determine the price it will agree to. Setting that price can take so long that would be home buyers may walk away. To try to prevent such delays, chase has begun doing appraisals and determining a minimum price it will agree to before a home goes up for sale.
Meanwhile, Wells Fargo has created a real estate agent education guide that explains the process, has increased staffing and has set up procedures to deal with short-sale requests and explain the process to homeowners. The bank says it has cut its average turnaround time from offer to approval from up to 90 days to about 30.

•The government is getting more involved. The Treasury Department soon will detail a plan to streamline short sales by providing standardized documentation and cash incentives to mortgage lenders and a moving allowance to homeowners that have lost their homes.
Treasury has said that mortgage servicers have opted to pursue foreclosures instead of short sales because of the complexity and time required to complete the discounted home sales.
"We realized we couldn't reach everyone with a modification. For us, that wasn't the end of the story," says Michael Barr, Treasury assistant secretary. "The alternative is to significantly speed up short sales."
Lenders say the approval process takes time because there are so many parties involved.
Some real estate Companies also are trying to advance the short sales process. Coldwell Banker in Studio City CA is aggressively working to train their realtors on handling short sales and other distressed properties, reo's in the San Fernando valley area, Sherman oaks ca, studio city ca,etc. Instead of 3 months to close a short sale, trained real estate agents in Coldwell Banker Studio City can get them done in two to four weeks.

Conclusion:
Before you short sale your home you will need a good real estate agent to represent you. Choose a trained and experienced realtor in your area (North Hollywood, Toluca lake,etc). You want to make sure that your real estate agent will get this done for you.