Short Sales

A short sale is usually the last option recommended by the bank or mortgage lender’s foreclosure workout department. A workout is exactly that; the mortgagor in default, in this case you, approaches the lending institution to work out a plan and terms to pay the arrearages on a default mortgage loan, and restructure a workable monthly payment plan, including the accrued interest and legal fees.  
When is it Appropriate to Short Sale? 
When all other options have been exhausted, the short sale is the final attempt to at least preserve your credit and resolve your debt. Short sale literally means that the sale of the house falls short of the amount owed on the mortgage. To secure such a solution, the lender must first agree to discount the loan and assume a loss through the sale of the property to a third party.  
Why Does the Lender Agree to Short Sale? 
The lender will review the condition of the housing market and your own financial stability to determine the viability of a short sale. If the expense incurred through repossession and foreclosure is greater than the discount of the loan, then the bank is likely to approve. With the amount of time entailed in foreclosure, the bank may also view the short sale as preferable to being tied up in bankruptcy procedures should you determine that to be the only alternative. 
Who Controls the Short Sale of My Home? 
Once the lender agrees to short sell, the debtor, you, put the house on the market and turn over all power and control on the decisions regarding your home. Because you are selling the home for less than the remaining balance on the mortgage, all proceeds are turned over to the lender which may or may not satisfy the debt. All bids are submitted to the bank for approval and they make the final decision on the sale.  
Advantages of a Short Sale to You 
There are 3 major advantages of a short sale to you. As soon as the lender agrees to the offer and you place your home on the market for sale, all foreclosure proceedings are ceased. With the resolving of the mortgage, you have an opportunity to regain some control on mitigating the deficiency. Unless otherwise stated in the terms, the short sale of your house does not resolve the debt owed on the mortgage. However, most importantly of all, you have preserved some shred of decency on your credit which increases your ability to make a full financial recovery.