A short sale is another strategy to avoid a mortgage foreclosure. A short sale is an offer by a lender to agree to the sale of the property for an amount less than the balance due on the mortgage. All of the proceeds from the sale of the property would be turned over to the lender, and the lender would agree to waive a claim against a borrower for any remaining balance due on the mortgage.
The borrower usually initiates the short sale process. In most case, a Realtor will work with the homeowner and mortgage company to find a buyer on terms agreeable to both parties.
A short sale will only work in situations where there are no junior mortgages on the property, and there are no judgment liens, tax liens, or other liens against the borrower which cloud title to the property.