What are the differences between a foreclosure and a short sale?

Foreclosure and a short sale are two different methods a lender can use to collect on a loan they have lent to a homeowner who can no longer pay it back. In Texas, a foreclosure occurs when the lender takes possession of the home and property, legally forfeiting ownership from the borrower. This process is usually regulated and enforced by the courts and is sped up with right of rapid foreclosure clauses in mortgage agreements. In contrast, a short sale is an agreement between the borrower and the lender, in which the borrower can sell the property for less than the amount of the loan. In a short sale, the borrower does not have to go through the lengthy foreclosure process and the lender typically agrees to forgive the debt. The primary difference between foreclosure and short sale is that a foreclosure is a legal action brought about by the lender to regain their money, while a short sale is a voluntary agreement between the lender and the borrower. Since a foreclosure requires court proceedings, it is important to understand the foreclosure laws in Texas in order to prepare for the legal aspects of the process. On the other hand, a short sale allows the borrower to avoid the lengthy process of foreclosure and reach an agreement with the lender.

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What are the differences between a foreclosure and a short sale?

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