In the American real estate sector, the percentage of home owners that resolve financial foreclosures through home short sales is greatly increasing. This is because home short sales have proven themselves as a great channel to walk out the door with a graceful, decent exit. Repossession of a home entails self-embarrassment, social stigma, and financial persecution in future transactions, so home owners will certainly do anything to avoid these consequences.

Home short sales can occur when the home owner has to sell his/her property in order to pay the lender the loan that he/she owes. It is called a “short” sale because the payment is “short” of the total amount that the home owner must give. For instance, if a home owner has a house that is worth 90,000 dollars, but has a loan due of 110,000 dollars, what he or she will do is to sell the property, give the 90,000 dollars to the real estate mortgage lender, and ask the lender to forgive the lacking 20,000.

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Homeowners have many reasons for missing a house payment, such as job loss, medical emergency, family death, divorce, and excessive repair bills to name a few. Some of these can be short-term problems that are easily resolved by making up the payment over a couple of months (with the consent of the mortgage holder of course); but in instances where the loss of income continues over several months, catching up becomes an impossible task.

One way to stop foreclosure is to educate homeowners on the importance of 1) making those payments, and 2) communicating with their mortgage holder in the event that they can’t make the payments. Most lenders can be sympathetic to a homeowner’s situation, but only if they are made aware of them.

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