In a January survey of senior loan officers conducted by the Federal Reserve Board, more than 65 percent of those surveyed said they anticipate steps such as short sales or deed-in-lieu of foreclosures to be at least somewhat significant loss-mitigation steps at their banks for 2008.

Convincing the lender

But don't think it's going to be easy. It's going to take a lot of proof and convincing evidence. To make your case, you, the buyer and any agents should work together to assemble the following package.

1. An authorization letter. You have to sign this -- and usually have it notarized -- giving the lender permission to discuss the mortgage situation with a potential buyer or an agent.

2. A hardship letter. You have to show that your financial situation is desperate. You'll have to be 60 to 90 days behind in your payments and have no significant cash, savings, retirement plans, stocks, bonds, cars, boats, vacation homes, time shares, jewelry, etc., that you can use to catch up or reduce your debt. And you will have to show the situation is irreversible -- that you will have no way to bring your mortgage current in the foreseeable future. You should supply as much evidence and documentation as possible, such as divorce papers, evidence of job loss, delinquent accounts, utility shut-off notices, car repossession paperwork, your last two years' tax returns, recent pay stubs and recent bank statements. Include any mitigating circumstances, such as medical problems or the loss of a job. The more convincing and sympathetic -- yet truthful -- the letter is, the more likely your lender will agree.