Q: Someone at work mentioned that if I was behind in my mortgage payments I could do a short sale. What is this?

A. A short sale is an agreement between you, the homeowner, and the bank to forgive a portion of your loan balance. For instance, if your mortgage is for $300,000 and the best price you can obtain for the sale of your home is $275,000, the bank may be willing to agree to forgive the $25,000 on your note. There are conditions to this. If you find yourself in this situation it is always a good idea to get good counsel from an attorney. Each lender has different requirements for a short sale, but if you are contemplating this route you will need to contact your lender and ask for a short sale package. The package will have requirements of what you need to submit to the bank before they will consider a short sale. Here is an important point. Whatever the bank asks for give it to them. This is not the time to argue with the lenders requirements. Short sales are growing in popularity and can be good options for homeowners in trouble who want to avoid foreclosure.