All decisions should be part of well crafted pre-foreclosure plan.  A workout plan based on a risk/
reward analysis. As lawyers we have multiple tools at our disposal. Many homeowners elect to put pressure on the lenders with our mortgage workout program while simultaneously pursuing a short sale or a deed in lieu.  Others elect to pursue a short sale until the Notice of Default is filed. 

I would like to point out one very common failed strategy...

A homeowner has a refinanced second.  The second will probably be wiped out by a short sale or a foreclosure sale.  The homeowner hears about a short sale and is told by their short sale "expert" that the short sale will take care of all their concerns....  The lenders will agree to the deal and they will not have to worry about a deficiency.   The homeowner is then told to stop paying their mortgages because the lenders do not work with homeowners who are current.  So, the homeowner stops paying. 

Months later the second seems to be holding out for "too much money" and the first says figure it out or we will foreclose on schedule.  It may never dawn on the Realtor or the homeowner that they were both played by the system.  The Realtor will still call himself a short sale expert and the homeowner will suffer a foreclosure and eventually pay back the second in full or pay large fees to an attorney to fight the foreclosure or file a bankruptcy. 

Sold out juniors (with recourse loans) have no reason to accept small settllements from people who did not leverage their legal rights.   It seems to many many of the seconds pretend to negotiate in good faith in order to get your Realtor to turn over copies of your pay stubs and tax returns as part of the short sale package.  Armed with that information they can estimate how much their collection attorneys will recover. 

Do not do a short sale without getting advice from us or a very competent real estate or foreclosure attorney.