Short Sale (Real Estate)

Glossary, Investment Strategy, Single Family

When a distressed homeowner sells a property for less than the amount due on a mortgage with the endorsement of the lender to a third party. All proceeds from the sale go to the lender and the seller is not permitted to experience financial gain from the short sale process although, during the housing crash, some subsidies for moving were permitted in some cases. Lenders may forgive the remaining debt or attempt to obtain a deficiency judgment against the borrower. In some states, the debt must be forgiven in order for the short sale to proceed.

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