Like any other individual, everyone aspires to own his dream house, but the problem is it is too expensive which is why people go to banks and lending or financial institutions to obtain loans to acquire it. In turn, a mortgage is executed on the property until the loan has been finally paid. However, it is a common reality that homeowners sometimes fail to meet the monthly amortizations and in the process, the amount due continues to pile up. This is when the harsh and painful consequence sets in, of losing the dream home we have so yearned for, causing grave damage to our credit rating, and finally forfeiting all those payments we had already made. All these happens when lenders are forced to foreclose the mortgage on the property because of the inability of the borrower to pay those amounts which he should have long settled.
Nowadays, people resort to short sales instead of resorting to foreclosure proceedings. Short sales have proven to be quite famous in the recent years as both borrower and lender surprisingly choose this option over the traditional foreclosure. On the part of the borrower, he is given the chance to redeem himself, as he is given the chance to settle those arrears by paying an amount less than that which is demanded. He is now content that he will not be losing his property and is now given the opportunity to get back on track in making good those monthly payments with respect to the remaining balance. Why would the lender agree to such an arrangement? From the point of view of the lender, it is actually better to receive something than getting nothing. Though it will pass of as a loss, at least only a portion of the arrears would be reported as a loss and not the entire amount. Both sides prefer this arrangement because they both get something out of it, neither party getting an undue advantage over the other. The process is actually more simple and much more economically viable, which is probably the reason why it is now a new option being entertained when it comes to problems on mortgaged properties.