Preforeclosure Short Sale

In this example, anticipted proceeds from the sale of a house priced at 275,000. The proceeds from the sale aren't going be enough to pay off all liens and the costs of sale; the seller would be short by $8,000. If the seller didn't have an extra $8,000 available to bring to the closing, could the home's sale still go through? Yes

When anticipated proceeds from a sale aren't enough to satisfy all liens and costs of sale, the mortgage lender may, under certain conditions agree to accept less than is due: in this case, the transaction would be described as a mortgagee-approve preforeclosure short sale. A preforeclosure short sale is a preforeclosure salein which your lender (s) may let you sell the property for less than the full amount due, and accept the proceeds from the sale as payment in full. The lender has no legal obligation to consider accepting less but many mortgage lenders do agree to let a financially troubled homeowner sell in an attempt to recover as much of the mortgage balance as possible.

For example, a financially distressed homeowner whose mortgage loan is delinquent, in default, or in no longer able to afford the cost of keeping the home, so he considers selling, but knows that he owes more than the property is worth. He doesn't have the cash to pay the difference between what is owed and what would have to the mortgagees at closing.

If he could demonstrate that it would be in the mortgagees' best financial interest to permit a passing of tile, they would have the option of mitgating potential future losses by accepting less then they are due.

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