What is the difference between a short sale and a foreclosure?

In California, a short sale and a foreclosure both involve real estate litigation law. The difference between the two is the outcome of the legal proceedings. In a short sale, property owners and mortgage lenders come to a mutual agreement that allows the property owners to sell the property for less than what the mortgage was originally taken out for. This agreement needs to be approved by both the property owners and the mortgage lender in order for the short sale to be finalized. If the agreement is approved, the property owners will no longer have to pay off the debt and the mortgage lender will get back some of their money. In a foreclosure, the property owners are unable to keep up with their mortgage payments, and the lender will take possession of the property in order to recover the money that is owed. This process is typically initiated when the property owners miss at least three months of mortgage payments and the lender will then repossess the property from the owners and put it back on the market for sale. The proceeds from the sale of the property will be used to pay off the mortgage debt. In summary, a short sale is a mutual agreement between the property owner and the mortgage lender that allows the owner to sell the property for less than what the mortgage was originally taken out for. A foreclosure is when the property owners are unable to keep up with their mortgage payments, and the lender will take possession of the property in order to recover the money that is owed.

What is the difference between a short sale and a foreclosure?

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