Homeowners facing foreclosure are in a difficult position. Many homeowners that are behind in loan payments (are soon to be behind) do not have the good credit necessary to refinance the mortgage or modify the loan agreement. If the homeowner can sell the property, he or she will be able to avoid foreclosure but will still lose the home. In some cases, homeowners are upside down in their mortgage, meaning they owe more than the property is really worth. If the homeowner were upside down in the mortgage, he or she would have to bring money to the table to sell the property. The sale price might cover the balance of the mortgage, but not the closing costs, realtor commissions, and repair costs. Most people facing this problem do not have the cash necessary to sell the property. In this bleak situation, homeowners have one option remaining for avoiding foreclosure. A short sale occurs when the lender accepts less than the balance of the mortgage to sell the property to a new buyer. The homeowner benefits from a short sale in many ways. For instance: Most homeowners do not have to bring any money to the table to sell the home in a short sale Some lenders will waive the right to a “deficiency judgment,” which means the homeowner cannot be pursued for the short fall in the future. The homeowner is able to avoid the damage a foreclosure causes to his or her credit score
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