Short Sale

A "short sale" is for home sellers who are upside down on their mortgage, it is what happens when a homes value is less than the amout of the mortgage. A hardship must exist, then sometimes home owners can negotiate with lenders and split the difference betweeen the sale price and loan amount, which still must be paid. You can try to negotiate a no-deficiency clause. Ask your real estate professional for details.

A short sale is often complicated. If the loan has been sold into the secondary market, the lender will have to get permission from Fannie Mae or Freddie Mac to negotiate a short sale. Fannie Mae, the secondary market giant, has a policy of looking at each loan individually.

If the loan was a low-down-payment mortgage with private mortgage insurance (or PMI), the lender needs to involve the mortgage insurance company that insured the "low-down" loan.

Once all these issues are resolved or negotiated, the house may be sold. It is a long process.

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