A short sale is a sale of property for less than the debt secured against it, which the lender has to approve because it is being asked to release its mortgage without being paid in full. The owner still owns the property and still signs, and the lender decides whether the sale happens.
- A signed contract is an application. Until the lender approves it, nothing has been agreed with the party that decides.
- Releasing the mortgage and releasing the borrower are separate sentences, and only the second one ends the seller's exposure.
- Forgiven debt is generally income, so a sale that produces no cash can still produce a tax bill. That is a CPA question.
- A foreclosure sale before closing ends the contract on its own, so the case timeline runs underneath the whole negotiation.
Related terms
All termsDistressed Property
A distressed property is one whose owner has less time than the asset does.
ClosingLis Pendens
A lis pendens is a notice recorded in the public records announcing that a lawsuit affecting a specific property is pending.
ClosingREO (Real Estate Owned)
REO is property an institution owns because it took it back, at a foreclosure sale or by deed in lieu, and now holds as an asset it never wanted.
Terms arrive with the writing.
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