ALTERNATIVES TO BANKRUPTCY OR FORECLOSURE PROCEEDINGS
If you bought and financed your home at a time when the real estate market was booming, there might come a time when you realize that the mortgage against it is more than the property is now worth. When property values drop, homeowners can find themselves “underwater.” If they need to sell the home, for any number of reasons, they can’t get enough to cover all of what they owe on it.
A short sale occurs when you convince your lender to let you sell your property for what it’s worth on the current market, even when this is less than the amount you owe. In many states, the lender “forgives” the difference between the property’s value and the mortgage balance.
One problem with this option is that you must convince the lender that you’re having financial problems, you can’t pay the mortgage, and your only other option is foreclosure. Your lender probably won’t approve a short sale just so you can move to a home you like better.