In 2012, the number of short sales tripled compared to 2011. Short sales in 2012 were the most utilized method to avoid foreclosure sales of homes. In 2012, short sales accounted for 11% of all home sales. In a short sale, homeowners sell their property at a price less than what they owe the bank. In a short sale situation the homeowner applies to the bank for permission to do a short sale. The bank agrees to accept less than is due on the mortgage and forgive the homeowner for the balance of the mortgage.
Getting Short Sales Approved
A homeowner must apply to the bank and show the bank either there is an existing financial hardship or that the home cannot be sold for the amount that is due and owing to the bank to convince a bank to agree to a short sale. It should be noted banks prefer short sales instead of going through the long and detailed foreclosure process.
Under the National Mortgages Settlement Agreement between the government and the five largest mortgage lenders in the United States Banks, receive a credit when they approve the settlement of a short sale. The banks have received more than $19 billion in credit from the government from short sales in recent years.
