| A short sale is a term used in real estate where the a | | | | application referring to short sales, but it will ask about |
| home or other property is sold for less than the | | | | delinquencies, and the debtor will still need to fully |
| balance owed on the mortgage. | | | | disclose to the lending institution all information regarding |
| In the case of a short sale, the lending institution and | | | | real estate they own or have owned that would |
| the debtor agree to terms where the loan balance is | | | | affect their ability to qualify for the current loan being |
| discounted and the lender will accept the proceeds | | | | applied for. If the debtor is completely honest about |
| from the sale usually, though not always, to fully satisfy | | | | their situation, there is no remaining delinquency from |
| the debt. This is done through the lender's "loss | | | | the short sale agreement, and they have a good |
| mitigation" department and is done during time of | | | | debt-to-income ratio, it's possible they may still get |
| financial hardship on the part of the debtor. This is | | | | approved. |
| normally done to prevent a foreclosure, but only if it's in | | | | If funding through a conventional lender is not an option, |
| the lender's best interest, i.e. it is their best chance of | | | | the potential buyer may still have the option of a hard |
| getting the most money back out of the deal. | | | | money loan or a loan from a private lender(such as a |
| Natalia Osorio Editor of the "Loan Modification | | | | friend, family member, or other source). |
| Foreclosure" website -- -- pointed out; | | | | “…A hard money loan is an asset-based loan |
| “…Because a short sale occurs due to financial | | | | secured by the value of a property. It is similar to a |
| hardship and it will show up on a credit report as | | | | traditional mortgage, but usually the interest rates and |
| "mortgage debt not paid in full", it is highly unlikely, | | | | fees are higher, it is provided by a private lender, and |
| though not impossible, that a person could receive a | | | | will usually only cover up to 70 percent of the market |
| loan to purchase another home. Although it does not | | | | value of the property. The advantage to this type of |
| typically have the negative impact that a foreclosure | | | | funding is that credit score is often not a large factor, if |
| or bankruptcy would have, it will still strongly affect a | | | | at all, and in the case of purchasing a foreclosure |
| credit score and the ability to qualify for credit, | | | | home, the 70 percent may cover the entire cost of |
| especially another mortgage…” | | | | the home if it's purchased below market value…” |
| There is no specific question on the federal loan | | | | N. Osorio added. |