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Understanding Short Sales

For homeowners who no longer wish to own their residence, but are looking for a graceful exit that avoids foreclosure, foreclosure alternative programs exist , including a Short Sale, or Deed In Lieu of Foreclosure transaction. Additionally, borrowers are reviewed for eligibility with the Home Affordable Foreclosure Alternatives (HAFA) Program.

In a Short Sale, the homeowner sells the property for less than the full amount due on the mortgage. When a homeowner qualifies for the Short Sale (such as HAFA), the servicer approves the Short Sale terms before listing the home and then accepts the payoff as full satisfaction of the mortgage.

With the Deed-in-Lieu of Foreclosure, the homeowner voluntarily transfers ownership of the property to the servicer as full satisfaction of the total amount due. The servicer may require that the homeowner list and market the property before they agree to a deed-in-lieu arrangement. In order for the Deed-in-Lieu of Foreclosure to work, the homeowner must provide a marketable title, free and clear of other mortgages, liens, or other encumbrances.