A short sale occurs when the proceeds of a real estate sale fall short of the mortgage balance owed on the property. To facilitate a short sale, the lender agrees to discount an outstanding loan balance, usually due to an economic or financial hardship on the part of the owner to allow a sale to occur. A bank's loss mitigation department is the contact person(s) that are involved in the negotiation process and agreement on short sale price. The borrower sells the mortgaged property for less than the outstanding balance of the loan, and gives the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the mortgage debt. The lender must approve a proposed sale, in advance for the sale to occur. The lender approval time fluctuates typically from bank to bank which involves solid communication between acting short sale agent the banks sortr sale rep. Circumstances influence the lender’s decisions to discount a loan balance. These circumstances could include the current real estate market climate and the individual borrower's financial situation. Often a bank will agree to a short sale if they believe that it will result in a smaller financial loss than going through the lengthy and expensive foreclosure process. For the home owner, the advantages include the opportunity to salvage some of their credit standing by avoiding a foreclosure on their credit history and, at least, partial control of the monetary deficiency.
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