In order to avoid foreclosure through a short sale, you have to meet several requirements:
- You must be upside down in your mortgage, meaning you owe more than the house is worth.
- You have to prove financial hardship, like getting laid off or divorced, or having substantial medical bills. The bank will require paperwork to prove that hardship.
- You need to show why you can no longer afford your monthly payment, such as if you had an ARM that's readjusted at a rate you can't afford.
- You can't be eligible for a loan modification.
The bank is going to want proof in writing that you meet all of these criteria. Getting approved for a short sale can be a long process in itself.