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Mortgage short sale

Mortgage short sales have been in the news a lot lately. There is talk of relief and talk of fraud and talk of fishing and going to sleep because people don't care or understand.

The fact is that short sales in fact do not exist except as a part of the foreclosure process. Even if a property is not in foreclosure and a short sale is requested the reason it will even be considered is the possibility of an impending foreclosure.

So what is a mortgage short sale? It's a sale of a property where the price is lower than the amount of the mortgages. In order to sell a house for a price which is less than the mortgages you need the mortgage holders permission.

The process of getting this permission before the property is foreclosed on is known as a short sale. For some time now they have been growing in popularity for three main reasons.

1. The seller stays in home during the negotiation process and usually without making any payments.
2. The lender makes more money than if they foreclose.
3. The lender doesn't ever take title to the property in order to get the bad loan off of the books

Not taking title to the property is a huge advantage to the lender. They have no liability if they have no ownership. Having no liability for taxes, insurance, someone being injured or for being accused of creating neighborhood blight is very important to the risk managers at any institution.

Remember also that the process is much the same as a regular foreclosure and in fact is just a foreclosure that permits title to pass to a new owner without first passing to the bank. The savings in escrow and title fees alone is massive when you consider the number of these taking place across America

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