SAFC Paper Talk #15
Scharner, 32, has Premier League experience after spending six years with Wigan Athletic and West Bromwich Albion.
However the Austrian international has found himself fell down the pecking order with the Bundesliga club, making just four first-team appearances this season.
O'Neill appears to still be keen to bolster his options at the back, and the 40-cap Austrian international is his number one target.
Valentine Hobel, Scharner's agent, told The Sunderland Echo that Sunderland are in pole position to land the experienced defender on a temporary basis:
"Paul wants to show next season what he can do for HSV, but for that he needs match practice and that would probably be at Sunderland.
"We`re hoping for a loan until the end of the season and then return to HSV."
In terms of departures, attacker James McFadden sees his short-term contract expire today and after just three substitute appearances, he seems unlikely to earn another.
The 30 year-old Scottish winger-cum-forward is fee to leave the Stadium of Light to join another club and there is believed to be interest from another of his former employers, Birmingham City.
Former Scotland and Birmingham boss Alex McLeish is believed to be interested in taking the former Everton man to the City ground, whilst Aberdeen and Motherwell are both expressing an interest.
Finally, Louis Saha is understood to have offers in the MLS, Middle East and Brazil as well at South Africa as he looks for his next club.