The short sale process is so difficult that it fails more than 40 percent of the time, takes entirely too long and needs to be streamlined, the California Association of Realtors said this week.

According to the Short Sale Lender Satisfaction Survey, fewer than three of five short sales close in California, illustrating the complexity and difficulty of navigating short sale procedures.

"Many underwater homeowners who have been hit by the recent economic crisis, can no longer afford to stay in their home and just need to sell their home as expeditiously as possible are unable to largely because of the complex and cumbersome short sale process," CAR President Beth L. Peerce noted.

Short sales occur when a home is sold for an amount less than what the current homeowner owes on his or her mortgage. They typically are the result of underwater mortgages, where the value of the home is less than what is owed to the lender.

Nationally, about 11.1 million households, or 23.1 percent of all mortgaged homes, were underwater in the October-December quarter, according to a report released Tuesday by housing data firm CoreLogic.

Some Southern California homeowners may owe as much as $400,000 on a house that is currently valued at $190,000. "That's very typical," said Doug Shepherd, owner of Coldwell Banker Shepherd Group.

Shepherd, who is based in Riverside, noted that the Inland Empire and neighboring cities have seen the worst of the crash. "Our region was hit hard and is recovering slower," he added.

The state and federal government offer some incentives for short sales, such as $3,000 in in relocation assistance. But the complexity of the process can be frustrating, Shepherd noted.

Realtors who participated in the CAR survey reported the complexity of the process and delays in dealing with lenders often hamstring the deals.

Nearly 94 percent of Realtors surveyed participated in a short sale deal last year, indicating a surplus of short-sale listings.

According to the survey, 70 percent of Realtors said their most recent experience in closing a short-sale transaction was "difficult" or "extremely difficult." A mere 10 percent of those surveyed described the process as easy.

Time is also an issue in the process. About 63 percent of those surveyed said lenders kept them waiting more than two months to provide a written response as to whether they would approve a short sale.

"The lack of standardization, long approval process, and lack of lender approvals are hampering what should be a 45-day short sale process," Peerce said. "Instead we're hearing the typical response time for lenders is at least 60 days, and in many instances, their response time exceeds 6 months."

A primary reason for the delays is that large banking institutions only own a small minority of the mortgages they service, Shepherd noted. But if a process was in place, agents would be willing to put in the work.

"Every Realtor will tell you, just tell us what you want and we'll provide it," he said. "We really need standardization, a streamlined process."