A short sale is when a financially distressed homeowner sells their property for less than they owe on the mortgage. This process is completed before the lender would seize the property in a foreclosure proceeding. The critical thing to remember is that in a short sale all proceeds go to the lender. Essentially, when a borrower defaults a lender has two options: (1) a short sale and therefore forgive the remaining mortgage balance or 2) pursue a deficiency judgment that requires the homeowner by law to pay the lender all or part of the difference in price. All short sales must be approved by the lender. Also, important to remember is the short sale process can be grueling and can take up to a year to complete and usually involves massive amounts of paperwork on the side of the borrower. I’m Stewart Brown, a licensed Mortgage Loan Originator in Palm Springs, California here to simply topics in Real Estate and Mortgage Lending. Please, like, share, follow and subscribe!
