http://www.pasadenastarnews.com/ci_7807381

Eli Tene is busier than ever these days. 

As president of I Short Sale Inc., the nation's largest loss mitigation and short-sale advisory firm, he fields about 20 requests a day from real estate agents, brokers and attorneys who have clients they feel are prime candidates for a short sale. 

A short sale is the sale of a house in which the proceeds fall short of what the owner still owes on the mortgage.

For a short sale to happen, the lender must agree to reduce the borrower's debt (the mortgage) and allow a sale to a third party with minimal or no cost to the borrower.

By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than is owed. 

The need for I Short Sale's services has never been greater.

Last week, Irvine-based RealtyTrac released numbers showing that one out of every 325 homes in California was in some part of the foreclosure process in November.

"A short sale is far less damaging to someone's credit than a foreclosure and it gives them a chance for a fresh start," Tene explained. "They can also save themselves the humiliation of being foreclosed out of their home. A foreclosure could have an adverse effect on their credit for 11 years." 

Using Woodland Hills-based I Short Sale, homeowners are able to avoid or minimize foreclosure, eviction and possibly avoid degradation of their credit.

Realtors can likewise help expedite successful short sales, creating a new and profitable niche while helping home owners at a sensitive time of distress, Tene said. 

"This is the best solution for lenders because they get paid today," he said. "If they go through the foreclosure process, that can take six months to a year. Then they'll get the property in a more deteriorated market and the home might be in worse shape." 

A short-sale typically takes about three to four months to complete. But some proposed short sales don't qualify because a buyer for the property can't be found, the lender is not cooperating or the owner doesn't have enough equity, according to Tene. 

When a lender OKs a short sale and agrees to absorb the financial loss, the documentation becomes arduous, according Pete Gliniak, owner/broker of Real Estate Express in Covina. 

"It has to meet auditing scrutiny, managerial review and investor approval to justify their taking the loss," Gliniak said recently. 

And for homeowners who opt to go for a short sale, the financial information that's presented to the bank is a little different. 

"Instead of putting together a packet that shows how (financially) strong you are, this will show how distressed your situation is," Gliniak said. 

Marty Rodriguez, owner of Century 21 Marty Rodriguez in Glendora, said her company provides its own short-sale service for clients. 

Currently, about 10 percent of the office's transactions involve a short sale, she said, and that percentage is growing. 

"We didn't have short sales before because prices were going up," she said. 

Tom Adams, owner of Century 21 Adams & Barnes, said President Bush just signed legislation that will likely provide an incentive for more distressed homeowners to pursue a short sale. 

"Prior to this new law, if a lender agreed to reduce the debt by $50,000 as an example, the homeowner would have to pay taxes on that $50,000," he said. "But this eliminates that, provided the home is owner-occupied and the owner didn't get a home improvement loan and pull the money out for something else." 

The credit crunch and tightened lending standards have left many homeowners facing foreclosure. But the current market - with homes often priced well the norm - is ripe for well-qualified buyers, according to Adams. 

"We had more sales last week than we've ever had, even in better markets," he said. "People are recognizing that they can get the same house they would have gotten two years ago but for 20 percent less."