Starting the 1st of November of this year Fannie and Freddie will allow underwater homeowners who are not delinquent on their mortgage to qualify for a short sale. Until now, the borrower had to be delinquent on their mortgage to be permitted to do a short sale. This created problems with strategic default and even some accidental foreclosures.Eligible borrowers will still be required to show hardship, including unemployment or the death of a spouse. There will still also be a hit on their credit almost as severe - if not as severe - as a homeowner who conducted a short sale agter missing payments.
With all that said, it doesn't seem to make sense to me that the borrower would want to stay current with their mortgage if they are going to take the same hit to their credit. What is the point of making payments on a property that you are underwater if you are going to do a short sale? I think I would save the money for the deposit on next home I was going to rent.