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The national real estate and housing scene has been horribly plagued with home values sharply dropping, unemployment rates skyrocketing and foreclosures being somewhat of the norm.

The reports coming out of Washington for the last 12 months attest to the brutal facts that an insignificant amount of homeowners facing foreclosure received mortgage assistance.

This has made the Obama administration to look continuously for a solution for the remaining 96 percent of homeowners already in foreclosure. This obviously doesn’t include future foreclosure victims in 2010 and 2011.

Reports show that currently there are 2 million housing entities in the United States in foreclosure or bank-owned with more surely to follow.

The government overall has been unproductive at saving homes from foreclosure. Sadly, the worse is yet to come according to Citigroup experts. Most financial analysts predict that there will be an increase of 8 million or more foreclosures in 2010 to 2011.

Which brings us to the subject of short sales. There was approximately 500,000 home sales in 2009 that were filed as short sales. The National Association of Realtors said this was close to 10 percent of homes sold for the entire year.

Not surprising is the attitude adjustment from banks who are beginning to go along with short sales in increasing numbers, Bloomberg.com says.

The St. Louis Refinancing Group and the local lending community also reported that short sales almost tripled by 40,000 in the first 2 quarters of 2009 compared to the same time frame in 2008.

However, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency, in the first half of 2009 there were 25 foreclosures started or completed for each short sale transaction.

Mr. Richard Green, the director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles writes: “It’s really finally dawning on banks that they’re better off with a short sale. I think banks were in denial.”

Let’s also consider the unrealized benefits for homeowners doing a proper short sale. They actually retain control of the sale just like any other home sale not to mention relieving themselves of any social stigma associated with a foreclosure.

And if your mortgage payments were never 30 days late and the lender didn’t require you to pay back the loan, you would be allowed to purchase a future home after said short sale occurred according to Fannie Mae guidelines either immediately or after a waiting period of no more than 3 years.

However, if your mortgage payments fell behind more than 30 days and a short sale was approved by the lender, you still may qualify to buy another home with Fannie Mae within 2 years.

Of course, if you do a foreclosure, with certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years.

And for investors who do not occupy the home as their primary residence would have to wait 7 years for a Fannie Mae insured loan.

With political pressures escalating from demanding consumers in the mortgage arena, the Obama administration has had no choice but to champion the short sale as a feasible alternative to foreclosure.

There have been finalized guidelines carefully defined by the Treasury Department for utilizing short sales under the Making Homes Affordable program.

Under the new Home Affordable Foreclosure Alternative (HAFA) program, the administration is urging participating servicers to follow through with short sales as an alternative to foreclosure.

This needed program has been implemented for homeowners who do not qualify for a loan modification under the Home Affordable Modification Program (HAMP).

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