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How to approach a short sale has EVERYTHING to do with who the investor is.
Also most stated income loans have Pool MI. It is not paid by the seller. The bank will about make 80% of the loan balance and get their asset back. Foreclosure versus short sale? Guess what? Either way.... the banks are making out with more money then they orginally lended. YOU MUST have a hardship to get a short sale. It may not be a true hardship to you, but any increase of expenes or decrease of income qualifies as a hardship.