This is definitely not a fun position to be in! But I can give you the summary of my short sale story that was relatively positive and quick.
I had to sell my house via short sale due to my divorce. My credit like yours was good, in the mid 700's. My real estate attorney advised that I also be deliquint in order to get the bank to even review my file. Luckily I was able to get the bank to accept the short sale offer quickly and I only received a 60 day late on my credit report. My score dropped down to 620. I completed my short sale last November 2010. Since then my credit has climbed back up to around 700. I would like to by another home for myself and my children before they start school so we are established (I currently rent a home in the town I would like to buy). Last week, I met with a LO at my local bank where I do business and she said she was more concerned about the late payments rather than the short sale on my credit. However she did indicate after the lates have aged 1 year on my credit report then my credit score should rise more and I may be qualified for another mortgage. I was really psyched by that answer! I thought for sure that the bank would say no way, no how to giving me a loan but I think I may be able to buy a home this time next year.
So if a short sale is the best option, go for it! Just make sure you a higher a good real estate attorney who will push the bank to process the paper work quickly and you won't accumulate too many lates. Honestly a short sale is a far better option in the long run then a forclosure.
Good Luck!
