By Eric Wolff, North County Times, Escondido, Calif.

Oct. 23--Dan and Colleen Spence both work in the gambling industry, but neither thought making a short-sale home purchase would become a game of chance.

They waited nine months for Bank of America to approve their bid on a Temecula home. When the letter came, the bank wanted to close on the property in 10 days. No problem for the Spences, who sent $2,000 in "earnest money," had the home inspected, and then -- nothing.

"We've had silence for a month," Dan Spence said. "We don't know what's going on."

Frustration can be heard in Spence's voice, and he's far from alone: Buyers and real estate agents say short-sale purchases have become a crapshoot of delays, reversals and occasionally, the jackpot of homeownership.

This may be why the U.S. Department of the Treasury plans to release new rules for short sales this week. The hope is that the agency will standardize and streamline the process, eliminating much of the frustration.

Short sales are intended to help homeowners avoid foreclosure while letting the bank cut its losses. Though they used to be uncommon, in the July-September quarter, short sales made up 13 percent of all sales nationally, and 20 percent in California, according to Campbell Communications, a market research firm in Washington, D.C.

In a short sale, the homeowner puts the house on the market and takes the best bid to the loan holder, even if it's well short of the remaining balance on the mortgage. If the loan holder approves the bid, the unpaid portion of the mortgage will be forgiven. The seller avoids foreclosure, the loan holder gets at least a part of its investment back, and the buyer gets a deal on a house.

That's how it's supposed to work, but in practice, agents and buyers say loan holders have become major sources of delay for the short sale process. They stand to lose the most from their investment, and they hold out for more money, or they don't have the staff to handle the amount of paperwork required, real estate agents say.

Real estate agent Jeannine LaChance with Coldwell Banker had a recent deal fall through. The bank had approved her buyer, but then a new buyer offered a higher bid. When the new, high bidder walked away, the bank returned to LaChance's client, but demanded more money.

"They think the market's going up," she said. "I think they're crazy."

The process is driving buyers nuts, too. LaChance recently managed to get two clients, Felicia and Ryan Lane, into escrow on a Rancho Bernardo condominium. The Lanes are in their mid-20s, this is their first home purchase, and they're nervous about the process. They didn't set out to buy a short-sale home, but the property they found offered the best bang for their buck. They waited three stressful months for the bank to act.

"We were pretty worried about it," Felicia Lane said. "We just didn't know. There's nothing we can do; it's not in our hands. We just had to wait and see and be patient."

LaChance said the delay mostly stemmed from the lender employee assigned to the bid: The person looked at the file only once a week. If the file was incomplete in some way, LaChance had to file a new document, and then wait another week to see whether it had been approved.

"They are just forever slow," she said.

The real estate market has suffered under the weight of two years of foreclosures and short sales. Many real estate professionals think the loan holders are just too understaffed to handle the workload. Real estate agent Jim Klinge often sells bank-owned properties, and he agrees banks are understaffed, but he doesn't think they'll do anything about it.

"This is a two-year problem," he said. "Why would you hire a bunch of permanent staff for two years?"

Wells Fargo & Co. said it has added staff to their short-sale processing units. Amy Savicky-Injaian, a spokeswoman for the company, said real estate agents, buyers and sellers alike need to understand how complicated a short sale is.

"In many cases -- especially in Southern California -- there may be mortgage insurance or second lien investors that need to be consulted and give their approval before a short sale can be approved," Savicky-Injaian said. "Getting all of those players together to come to an agreement can take some time."

Nonetheless, real estate agents feel driven to find tricks and tools to beat the bureaucracy.

LaChance doesn't tell lenders when a buyer has dropped out on a short sale property. Do that, and any new bids go to the back of the line. Instead, she waits until she has a new buyer, and then she submits exactly the same bid, but with new names on it. The negotiators see there are new buyers, but with a bid in hand, they keep the same file open.

The Lund Team in Carlsbad said it can consistently turn around short sales in three months, because it has a clerk who specializes in short-sale paperwork.

"We have someone who knows exactly what order the pages need to be stapled, and when everything needs to be filed," said Carlton Lund, head of the agency.

That's why many real estate professionals are waiting for the Treasury Department's announcement this week with wary optimism. Others are less excited.

"Oh good," LaChance said when she heard about the planned announcement. "We're only two years into this."

Call staff writer Eric Wolff at 760-740-5412.

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