Simply put, a short sale is the sale of a property wherein the purchase price is not high enough to cover the existing debt that is attached to the property. It is "short" of paying off the full balance of all the debts owed on the property.
There are several steps that need to be taken in order to submit a short sale. Most banks are the same, therefore the process is simple to understand and the paperwork is pretty universal.
Every day it seems as if there are new stories about predatory lending, foreclosures and people in trouble. Over-investment in housing, irrational exuberance and fraud has led to the high rate of foreclosures we see today. So who's to blame?
Lenders have been predatory, fraudulent and greedy. They assumed that housing values would continually increase the way they were in the mid 2000's. Also borrowers have been overconfident and at times ignorant of the situation also.
Homeowners were using their "equity" as another form of income, re-financing continually, getting home equity lines of credit, etc. This behavior led to people being financially over extended and 1 paycheck away from disaster.
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