A short sale is when your home sells for less than what you owe. It is an agreement between the bank and the seller of the home. The lender may ask the seller for an un-secured note to make up the difference between the proceeds of the sale and the balance due. If either party does not agree with the terms of the deal it does not close. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. Short sale is only an option if foreclosure is eminent and a hardship exists.
Examples of hardships:
Unemployment
Divorce
Medical emergency / sudden illness
Bankruptcy
Death
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