A short sale is where homeowners sell their homes for less than the outstanding mortgage(s). It is sometimes used by mortgage lenders as an alternative to foreclosure. The process of obtaining a short sale can often drag out for months as various settlement offers are proposed and reviewed. Short sales may have income tax consequences, and lenders may still seek to recover the unpaid amount. Legal assistance with short sales is strongly recommended. A short sale adversely affects a person’s credit score, but typically the impact is less than a foreclosure.
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