In most distressed mortgage situations, foreclosure is a last
resort for all parties involved. The homeowner and the lender
usually want to avoid foreclosure at all costs. That is why a
short sale is advantageous to foreclosure and lenders are typically
very motivated to pursue a short sale prior to foreclosure.
A short sale gives the lender the ability to cut its losses
upfront thereby avoiding the expense and time of a foreclosure
and potentially greater losses. Lenders want to make loans; they
do not want to be in the business of owning and managing real
estate. Whether the lender chooses to go through with a foreclosure
or agree to a short sale, they are taking a loss either way, but
in many cases they would take less of a loss with a short sale
and resolve the matter in a comparatively shorter time frame.
In nearly every case, a short sale offers a significantly better
return on the lender’s investment than a foreclosure does.
