If you are looking to purchase a short sale, or are interesting in selling your home in a short sale as an alternative to foreclosure, there are quite a few real estate terms you will need to become familiar with.

Foreclosure: A foreclosure is the process where a bank or mortgage lender takes possession of a mortgaged property because the home owner is unable to keep up with mortgage payments. In order to avoid foreclosure, many home owners, mortgage lenders, real estate agents and banks are now turning to short sales.

Short Sale: A short sale is a pre-foreclosure sale of a home where the home sale price is less than the amount owed to the mortgage lender or bank. In a short sale, the mortgage lender or bank has to agree to terms that will allow the seller to price the home at a lower price than the amount owed, and still fully satisfy the terms of the debt. A short sale is often desirable because it can mitigate certain fees for both the borrower and the lender.

Qualifying Hardship: Generally, most creditors require that the borrower prove that there is a hardship that makes them unable to pay the difference between the short sale price and the debt that is owed.

Loss Mitigation: Most large creditors have loss mitigation departments. Loss mitigation departments evaluate short sale applications for approval.

Deed in Lieu of Foreclosure: A deed in lieu of foreclosure is a deed where a borrower conveys interest in a property to the lender to satisfy the terms of a loan that is in default, in order to avoid foreclosure. Both sides, the borrower and the lender, must enter into this agreement on good terms and in good faith, of their own free will. Because of the requirement that both sides enter into this voluntarily, many lenders will not act upon a deed in lieu of foreclosure unless they have received a written offer from the borrower that states that they are offering to enter into negotiations voluntarily. This is to protect the lender from a subsequent claim that the lender pressured the borrower into entering into such an agreement.

Tags: , , , ,

This is filed under Short Sales.

     Twitter It!