As millions of homeowners find that the balances of their mortgages are in excess of the current values of their homes, many have turned to "short sales" as a tool for avoiding foreclosure. As real estate values in certain regions have fallen, banks have become more receptive to "short sales" because the repossession of real estate is, from a financial standpoint, less attractive than ever before.

The term "short sale" refers to an agreement by a bank or mortgage lender to accept a reduced payment ona mortgage loan balance, usually because of an economic hardship on the part of the mortgagor (property owner). Typically, the property owner has already defaulted in making monthly payments. Oftentimes, the homeowner is unemployed or is facing enormous, unanticipated costs, such as those occasioned by medical crises. In a short sale, the creditor agrees to allow the property to be sold for a price that is less than the amount owed on the mortgage, and to accept the sales price as payment in full.