A Lender might not Accept a Short Sale if......
As stated before, even if a homeowner is absolutely certain they are headed for default, most banks will require missed payments before they will even discuss a short sale or the their short sale process.
If the lender believes they can get more money for the home by foreclosing, they are likely to foreclose no matter the source of financial trouble. Their main objective is to recover as much of the funds as they can.
If a mortgage is co-signed, the bank may choose to hold that person responsible for the mortgage instead of negotiating a short sale.
Do you pay PMI on your loan? If so, there are certain cases where they will advance funds in order to keep payments on track. This would help only in terms of short term financial troubles.
Additionally, the home owner may be eligible for a loan modification.
Make sure you check into all of these issue before you decide to pursue a short sale.