Do I need to make a short sale offer with the bank?

[Chris Healy]

I'm renting a room in this townhouse in Orange County, CA and the landlord has received a foreclosure notice. (Notice of Trustee Sale). He subsequently declared Chapter 7 Bankruptcy which will be finished within the month. He will be loosing the place no matter what and will be left with nothing. I believe that by the 15th of March, the property will be back in line to go to a trustee sale where it will then become an REO (Real Estate Owned) property.

The owner (my landlord) is severely upside down. He owes about 450 on the 1st mortgage (Countrywide) and 150 on the 2nd mortgage (E-trade). The property, when fixed up should be worth about 490.

I like the place and don't really want to move. It's not my dream home though.

My thought is, I'd like to approach the bank and do a short sale with them. I'm already preapproved. I'm not sure what to do next. I'm starting to talk to an agent I used before but don't know if it is necessary. The owner is willing to sign a release of financial information form so I can talk to the bank about his loan. I believe the loan would be in the "Loss Mitigation Department"?

My questions are as follows:
1. Do I need an agent to do this deal with the bank?
2. Do I work with the "Loss Mitigation Department" of the bank to see if I can do a short sale?
3. If the loan goes through the rest of the foreclosure process, the 2nd get's wiped out. If I try to do a short before the foreclosure, what do I do about the 2nd as I am trying to get it for a considerable discount from market. (70 cents on the dollar is what I was thinking.)
4. How do I approach the bank on this? Do I just make an offer? Do I give them a value proposition and explain why I am offering what I am offering?
5. Is there much of a chance that the bank will do a deal like this in such a short amount of time? (Remember, once it becomes REO, the tenants will be evicted. ME, and I don't really want to deal with that at the same time.)

Any input would be helpful.

Chris[/list]