ethics aside, stargirl had some questions, so here are the basic broad brush answers.
A short sale is when you sell for less than you owe and the bank agrees to take less in order to avoid foreclosure. They do this because it takes a year to foreclose and the occupant strips the place so it is worth more with the occupant’s cooperation. The rub is that all the lenders have to agree and the second mortgages get close to wiped out so they don’t always agree, shorts don’t always work, maybe half the time because anyone can list, but it takes an offer from a buyer before you can ask for permission. It’s like taking your sleeping bag and pillow to your friend’s house and asking your parents if you can spend the night at about midnight. it’s a crap shoot.
Also, yes, people took out more money than their house is currently worth and more than they can afford to pay back, that’s the bank’s fault as much as the borrower, they drank the appreciation kool aid as much as anyone.
Before you figure out a scheme, that ship has sailed, too late, and I’d be willing to wager a bar tab that your friend didn’t pocket the 522k, he/she probably pissed it away. That is what is really hurting the economy right now, nobody is pissing away free money anymore, nor will they be anytime soon.
As far as when foreclosure will happen, you need to do more research, when the NOD (notice of default) was filed can give you an idea. That takes place after about three missed payments. The NOT (notice of trustees sale) is a couple months after that, and that is what is deem a foreclosure, another month and it’s on the streets. Run a search on local newspapers classified legal section, the NOT has to be publicly posted or go to foreclosure.com and sort data by name of defendant. County sites or in person locations during a grantee search can give you both NOD and NOT info, riverside county has it online, I think Sd does as well but not sure.
