2006-12-29 16:20:54 · 4 answers · asked by georgeforone 1 in Business & Finance ➔ Renting & Real Estate
A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes.
2007-01-01 20:13:15 · answer #1 · answered by alysia j 1 · 0⤊ 0⤋
A short sale is when someone sells their house, but there is not enough money to pay the mortgage off. So the seller is "short". The seller's lender accepts the "short" amount instead of foreclosing.
I don't know what it will do to credit, but I do know that lenders only opt for this if the only other option is foreclosure. They don't do it if you've been making the payments.
Also, the "forgiven" amount ends up being considered as income for the seller - your lender will send you and the IRS a 1099 form for that amount.
2006-12-29 16:28:45 · answer #2 · answered by teran_realtor 7 · 1⤊ 0⤋
taran is right on with the definition. as far as how bad it would hurt ones credit? Well since a lender is essentially "writing off" tens of thousands of dollars as an uncollectable debt, i'd imagine its bad for as long as it appears on your credit report. Remember, regardless of your numeric credit score, lenders and others such as potential landlords can look at your actual credit report, and will see the short sale and that you didn't pay back all this money.
more info
http://en.wikipedia.org/wiki/Credit_report
2006-12-29 20:18:04 · answer #3 · answered by Stanley 3 · 0⤊ 0⤋
THIS IS NOT AN ANSWER. I WANT TO HEAR ABOUT THIS ISSUE. THANK YOU
2006-12-29 16:42:20 · answer #4 · answered by kwhic 3 · 0⤊ 4⤋