How Does a Mortgage Short Sale Work?

Video Transcript

"Hi. How does a short sale mortgage work? That's going to be the discussion of today's topic. A short sale is basically when a lender agrees to discount the loan on a mortgage for several reasons. Them main reason is someone is in default, which is usually ninety days past due on a mortgage payment. Now, the lender does not want to foreclose on a property because it costs money. It takes them a long time to recoup, the title to the property, so instead of wasting more time, and losing more money, they agree to do a short sale. And basically what that is, is they agree to take a lesser balance of what is owed. So assume you have one hundred thousand dollars on your mortgage. And you are able to, or your real estate agent, or your attorney is able to talk to the lender and reduce the payoff, which is the one hundred thousand to sixty thousand dollars. You will walk away, there will be no foreclosure on your credit, and the property is sold, the lender takes the sixty thousand dollars of closing cost, and you walk away. Much better than going through the foreclosure process. OK. So that's exactly how a short sale works, again, my name is Adriel Torres. I'm the owner of ultimatecredittoday.com."