short sale

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Permalink Reply by HUD Foreclosed on September 24, 2008 at 2:20pm

Hi Etelka,

I'm not sure whether you're a Premium Member, but if you are, you might be interested in checking out Chapter 9 of our foreclosure tutorial. It covers short sales, so that you should have a basic understanding of this term by the end of the chapter.

To put it into a short summary, a short sale occurs when a property is in foreclosure and the bank is eager to unload the dying asset. Generally, the lender takes a lower amount for the home than the total owed to them by the original borrower (they sell it at a loss to themselves).

There are two primary situations where you might see a short sale negotiation initiated. In one situation, a short sale can be negotiated between the defaulting borrower and the lender. In another, the bank has already foreclosed on a homeowner and wants to get rid of the property before it loses any more value.

The kind of short sale that limits further damage to the borrower in default's credit is called a "Payment in full without Pursuit of Deficiency Judgment." In this case, the lender generally takes a lower amount for the home than the total owed to them by the original borrower (they sell it at a loss to themselves) and "forgives" the remaining amount (i.e. does not continue to chase down the borrower for the leftover amount due).

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Permalink Reply by etelka Matyus on September 24, 2008 at 7:01pm

I appreciate it your help.
Regards,
Etelka

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