Financial trouble can come from mortgage payments that are no longer affordable. A loss of income or a sudden family hardship can result in falling behind on mortgage payments. When you are behind on a mortgage bankruptcy can sometimes be avoided by working directly with the bank to come to a solution. Mortgage servicing companies often refer to this as “loss mitigation”, meaning that they will take efforts to work with you to minimize the money they will lose should a foreclosure occur. Short Sales are one of those options.
A short sale is an agreement with the bank where you will sell the your property to a third party and the bank will agree to take less than what is owed on the mortgage. The mortgage company then forgives the debt that was remaining. It is a solution when your property is worth less than what is owed.
There are alternative loss mitigation solutions with mortgage companies such as loan modification agreements or deed in lieu transfers. A short sale is one option for addressing a defaulted mortgage account.
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