What’s the Difference Between a Short-Sale and Foreclosure?

Short Sales and Foreclosure are quite different, but how different?

A short sale is when a bank or mortgage lender agrees to discount a loan balance due to the borrower’s hardship. The debtor sells the mortgage property for less than the outstanding debt on the mortgage and turns over the sale to the lender. The lender will typically be paying for realtor commissions and making the final decision on the sale of the home. The lender has the right to approve or disapprove the sale and also the “short sale” of the mortgage property.

A foreclosure is a forced sale of real estate property to pay off the loan that the debtor has defaulted on. The bank or lender will retain ownership or the real estate property will be auctioned at court or sherrif’s sale.