Selling Short

I enjoy the Suze Orman show, and the other night she talked to a caller about the concept of selling short.  She said that rather than letting a property go into foreclosure, the buyer may be able to get the lender to agree to a short sale.  If I understand this correctly, this means the bank would agree to settle for whatever the home sells for and forgive any remaining amount on the loan.  I am curious to see if any of you know of anyone who has ever successfully negotiated such an agreement with their lender?

Must be crazy in those places where the house prices fell to more than half.  Mine actually was valued right over $200k I believe back in 2005 and is down to 170k now but I owe about $126k so its not really all that bad.  Chances of a 2400sf home going under $126k and staying there is very low.

dont get tension where u are alone with debt

Essentially, a short sale means the proceeds from the sale of the property fall short of what is owed on the loan that was secured by the property. If the lender approves the short sale, all of the proceeds from the sale go back to the lender.

It is one tactic that people use to avoid having their home foreclosed on. From the lender's point of view, they have to determine if approving the short sale will allow them to recover as much of the owed amount as possible. The alternative, foreclosing on the home, comes with carrying costs that could eventually lead to a greater loss for the lender (compared to what they would have lost by approving the short sale.)

Lenders will agree to do this if the borrower can demonstrate a genuine financial hardship. If the lender is a bank, their loss mitigation department would most likely handle the negotiations.