A short sale is a term used to describe a process in which a lender agrees to accept a lower payoff amount on a loan than what is owed.
Comparable home sales must substantiate that the home is worth less than the unpaid balance due the lender. This unpaid balance may include a prepayment penalty.
It used to be that lenders would not consider a short sale if the payments were current. That is not always the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems before they start.
The seller must submit a letter of hardship that explains why the seller can not pay the difference due upon sale, including why the seller has or will stop making the monthly payments.
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