April 2010

To put this in basic terms a real estate short sale is when the proceeds from sale fall short of the loan balances which encumber the property. This happens when a home owner (borrower) can no longer pay the mortgage against their property. The lender may decide that selling the property short with a moderate loss is better than either pressing the home owner or foreclosure options. Foreclosure can mean larger costs to the bank and a less desirable credit report outcome for the borrower. A short sale does not necessarily release a borrower from the deficiency/remaining balance of the debt or the obligation to repay that deficiency.

Short Sale Process

For a short sale to occur the mortgage lender needs to agree and facilitate the discounting of the loan…