Basically a Short Sale is where the Home Owner owes more than their property is worth, but they are not late on payments or in foreclosure.  They negotiate with their Lender to market their property.  If an offer comes in for less than the mortgage, some Banks are willing to release the Home Owner from the difference.  THIS HAS TO BE IN WRITING!  Recently, Lenders are not releasing this portion of the debt and coming after Home Owners later – they have a six year statute of limitation on the contract to file legal action to collect.  They can lien property in any State property is owned by the Home Owners and would be valid for up to 20 years.

AS A RESULT, Home Owners in this situation are being forced to let their homes go into to foreclosure.  All of these choices are complicated depending upon the overall Home Owners financial situation, the State the property is in, if there is a HELOC (Line of Credit) or second mortgage, and whether the property is the Primary Residence or not.  Everyone in this situation needs to get expert advice before they make this decision.

There are lots of resources online to get detail information.  I think www.mortgagerelieformula.com/recourse/ has a good webinar on these issues.