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| The investor put up the money for the loan;examples are Fannie Mae, Freddie Mac, FHA-HUD etc. The investor takes to loss in a short sale, not the servicer. The Serivcer is the institution that services the loan; examples BAC, Provident, Chase, Wells Fargo etc. IF you have PMI or mortgage insurance the mortgage insurance company takes the loss in a short sale, not the investor. They may share the loss though. Mortgage insurance is not hazard insurance or property insurance. It was an insurance policy the lender made you take out to protect the mortgage company and investor from your default. It was put into place because you put too little down or nothing down when you purchased. |
In real estate, a short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of the proposed sale.
