The terms foreclosure and short sales are sometimes confusing to many people and they need clarification to understand that these two are different concepts. They are somewhat alike considering the fact that they have to do with mortgage or home ownership, but the concepts are different.
A foreclosure is a situation where a person has defaulted on a mortgage loan payment and cannot keep up with the installment payments. When this occurs, the lender which is the bank then puts the home up for sale. The bank tries to get another buyer for the house. It is important to note that during a foreclosure, the proceedings are taken to court as this is a requirement of the law. When in court, the borrower is expected to appear in court to explain his own side as well as why he is unable to make his payments. When the judge is satisfied, then the home ownership is formally transferred away from the current lender. The bank then auctions the house to get a new buyer for the house which has been officially foreclosed. Loan Modification specialists can be consulted for more information in this regard.
Short sales are also like foreclosures because of the fact that the home is lost by the client when he cannot make the payments. But the difference is that in short sales, the client looks for a buyer for the house and introduces the buyer to the bank. During the court proceedings, the former owner does not have to be in court when the proceedings are going on. Loan Modification attorneys near you could be contacted for more information.