Mortgage Advice

Understanding Mortgages: What is a Short Sale?

(7/11/2012) In the midst of one of the most uncertain real estate markets in history, it’s more important than ever to be informed. In a continuing series, we take a look at some of the most pressing questions about mortgages, refinancing, home equity, and other real estate options available to you.

With the new real estate reality in the last few years, “short sale” has become an inescapable term. When a mortgage company wants to avoid foreclosure, they may accept less than the full value of the home in a sale. This short sale helps them get rid of a defaulted loan before resorting to foreclosure.

While short sales have become more popular in the midst of a troubled real estate market, it’s actually a potentially beneficial phenomenon. Some analysts call short sales one of the only win-win situations existing, benefiting both lenders and borrowers.

Mortgage companies consider short sales more attractive alternatives to foreclosure. Instead of a long drawn out process of taking ownership of the property, which may then stay vacant and unprofitable for months or years, companies can cut their losses early on.

Borrowers who currently own the home benefit from short sales for some of the same reasons. They can prevent foreclosure and all the credit-killing associations with it, and get out of a situation where they can’t afford their mortgage.

Borrowers who are looking to buy also benefit - they can obtain a property for a bargain price. Lenders typically slash prices on their short sale properties, since getting some money is better than no money.

Overall, short sales can provide a boost for most of the players in the housing market by providing an incentive for additional sales and preventing some of the damage of foreclosure.

In the past, one of the major drawbacks of short sales was added tax liability. When lenders forgive a borrower’s debt, which is technically what occurs when lenders opt for short sale or foreclosure, the debt was actually considered income. Any amount forgiven over $600 had to be claimed on tax returns, which could be a major drain on borrowers.

The Mortgage Debt Forgiveness Relief Act of 2007 ended this tax law for borrowers doing a short sale on their primary residence. In addition, new IRS laws allow certain borrowers with investment properties to reduce or eliminate their tax liability.

For additional reading:

Short Sale Option:

Home Affordable Foreclosure Alternatives Program:

How to do a Short Sale:







Refinance at Today's Low Rates!




Follow the link to continue reading the related articles.

Federal regulators order mortgage servicers not to violate military servicemembers' homeowner rights

Homeowner's short sale ebook just in time for FHFA streamlined short sales

HUD unloading more failing mortgages to shrink shadow inventory, save struggling homeowners from foreclosure

Shorts sales streamlined to head off 'underwater' mortgage foreclosures

Infographic: 2012 shaping up as good time to buy

No shortage of short sale fraud

Short sales not short nor easy














Fannie Mae & Jumbo Mortgage Rates

Just One Click! = Current Rate Chart

Pennsylvania Mortgage Rates Current Mortgage Rates - Hawaii Current Mortgage Rates - Alaska West Virginia Mortgage Rates Virginia Mortgage Rates District of Columbia Mortgage Rates Maryland Mortgage Rates Delaware Mortgage Rates New Jersey Mortgage Rates Connecticut Mortgage Rates Rhode Island Mortgage Rates Massachusetts Mortgage Rates New Hampshire Mortgage Rates Vermont Mortgage Rates New Hampshire Mortgage Rates Maine Current Mortgage Rates Vermont Mortgage Rates Current Mortgage Rates - New York Current Mortgage Rates - Michigan Current Interest Rates - Wisconsin Current Mortgage Rates - MINNESOTA Ohio Mortgage Rates Current Mortgage Rates - Kentucky Current Mortgage Rates - Indiana Illinois - Current Mortgage Rates Current Mortgage Rates - Iowa Missouri Mortgage Rates Current Mortgage Rates - North Carolina South Carolina Mortgage Rates Current Mortgage Rates - Florida Current Mortgage Rates - Georgia Current Mortgage Rates - Tennessee Current Mortgage Rates - Alabama Current Mortgage Rates - Mississippi Current Mortgage Rates - Louisiana Current Mortgage Rates - Arkansas Current Mortgage Rates - Oklahoma Current Mortgage Rates - TEXAS Current Mortgage Rates - New Mexico Current Mortgage Rates - Arizona Current Mortgage Rates - Kansas Current Mortgage Rates - Nebraska Current Mortgage Rates - Colorado Current Mortgage Rates - Wyoming South Dakota Mortgage Rates Current Mortgage Rates - North Dakota Current Rates - Montana Idaho Current Rates Washington Mortgage Rates Current Mortgage Rates - Oregon Current Mortgage Rates - Utah Current Mortgage Rates - Nevada Current Mortgage Rates - California

Start by selecting your state

Get the Updated and Improved Mortgage Rates App from

iPad for Mortgage Rates

Real Estate Market News

Refinancing: Selecting a Loan

Moving Ahead With Your Refinance