In Atlanta, GA, a record 3,431 foreclosures hit in September and the region is suffering through a 24.8 percent rise in foreclosures this year, according to the Atlanta Foreclosure Report by EquiSystems LLC. From Buckhead to Stone Mountain, homeowners of both moderately priced and high-end homes are losing their most valuable asset.

In Colorado, through August, there were 5,665 foreclosures filed in Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson counties -- a 37.7 percent jump from the 4,115 foreclosures in the first eight months of last year, according to county government record keepers.

Seattle, WA's delinquent mortgages rose 50 percent between June 2000 and July 2003, according to Loan Performance, a San Francisco firm that tracks mortgage data monthly.

Foreclosures are expected to reach a record 7,000 in 2003 in Austin, TX, according to Addison, TX-based Foreclosure Listing Service Inc. Foreclosures are up 64 percent since the first of the year.

And in Silicon Valley, where home prices remain far above a half-million median and continue to rise, investors and speculators who shop the foreclosure market say banks raise the gavel at less than the full value of loans just to unload the growing number of homes they've had to take from owners.

The experts in regions from coast to coast say the foreclosure numbers are relatively small, but more and more often sellers are taking homes off the market because the owner can't find a buyer willing to pay for homes with loans higher than the home's true value. In many cases, the owner suffers foreclosure.

Chalk it up to dot com bust dust, a stubbornly soft economy and its shrinking job market, the proliferation of easy money mortgages, poor financial planning and just plain gotta-have-it-now greed, a growing number of homeowners face losing their most valuable asset.

A short sale, while not a panacea, may be one way out of the mess.

A short sale occurs when a lender agrees to write off the portion of a mortgage that's higher than the value of a home. A buyer must be willing to purchase the property.

The strategy can offer a softer financial landing than bankruptcies or foreclosures, provided you survive the turbulence on the way down.

A difficult consumer real estate transaction to approve, short sales involve as much, if not more paperwork than an original mortgage application.

Instead of proving your credit worthiness and financial stability, you must prove you are broke. You must be without cash flow, including savings, investments, trusts, liquid retirement funds or other finances to tap.

Ironically, while you are proving insolvency you also may reveal the dark under side of your original application. Insolvency today could be rooted in financial trouble that began before you purchased your home -- trouble you didn't reveal to your lender who could now consider your tight lip fraud from the past.

Property encumbered by a second mortgage will likely kill a short sale deal, because the second lender often won't remove its lien and risk losing its investment. A private mortgage insurance holder will also want to protect its interests.

Before you can even approach the lender you must have a firm market-value offer from a qualified buyer and a broker who can negotiate the deal.

And when you can least afford it, you may have to hire an attorney to negotiate what the lender will report to the credit agency.

If you qualify for the short sale, it isn't over until the tax collector sings.

Any remaining difference between your home's value and the balance on your mortgage is considered a forgiveness of debt and, in virtually all cases, that's income that is taxable.

Chalk up another expense for a good tax professional to hold your hand.

The bottom line one short sales? Be aware. Be very aware of the devil in the details.

Published: October 22, 2003

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.