What is a Short Sale?
A Short Sale means the seller's lender is accepting a discount of the loan payoff to release an existing mortgage to allow a sale to occur. Typically, a seller most likely needs to be in default and have stopped making mortgage payments before a lender will consider a short sale. Just because the seller is requesting a Short Sale for seller's lender(s), it does not mean the lender(s) will accept the Short Sale terms. In the Short Sale scenario, the mortgage payoff exceeds the contract price, and the lender may either forgive all or a portion of the debt and release its mortgage lien on the property, therefore allowing the sale to occur or the lender can agree to release its mortgage on the property and not forgive the deficiency, but have the seller sign a new promissory note for the balance or, in the alternative, the lender can do a combination of the two.
