Short sales

With the resent rise in foreclosures, many listings may include the term pending bank approval. This means that the bank must agree to except less then is owed on the mortgage to avoid foreclosure. This type of buy is known as a short sale or Deed in lieu of foreclosure. Some people ask why the bank would consider releasing the homeowner from the mortgage and except the lower amount. This is because foreclosing on the property is expensive.
Other options that may be available to homeowners is forbearance. If you are granted a forbearance you don't make payments on the loan, but interest is still accumulating. Banks will use this to avoid foreclosure if the homeowner has a temporary loss of ability to pay the loan, such as being laid off.

If you find your self facing foreclosure, call your lender. They want to avoid foreclosure and will help work out away to get out of your home, or keep it. Sometimes they may permit someone to assume your mortgage.