Asian Journal- The Filipino-American Community Newspaper

Answer: A short sale is a sale of real property in which the sale proceeds fall short of the balance owed on the property’s loan. It happens when the borrower cannot pay the mortgage loan on the property and the lender decides to sell the property to a third party at a moderate loss rather than pursuing a foreclosure action.

Answer: In a short sale, the lender agrees to discount the loan balance because of an economic or financial hardship on the part of the borrower. The homeowner/borrower sells the property for less than the outstanding balance of the mortgage loan and turned over the proceeds of the sale to the lender.

Answer: A short sale is simply the most economical solution to the problem of both the lender and the borrower. In this situation nobody is giving a favor to the other party. The lender will benefit because it will incur less financial loss than foreclosure or the continued non-payment of the borrower on the loan. The borrower is able to lessen damage to his or her credit history and get better control of his or her finances. A short sale is typically faster and less expensive than foreclosure.

Answer: A short sale is a type of debt settlement and it adversely affects a person’s credit report although its negative impact is less compared to a foreclosure. Short sales remain in the credit report for seven years whereas a bankruptcy and foreclosure remain in the credit report for ten years. A person with a short sale credit report can obtain another mortgage in one to three years depending on the person’s other credit information.

Answer: Applying for a short sale is the better alternative because the borrower has extra time to stay in the property while the short sale is in progress and the impact on his or her credit report is less severe.