Depending on the State, an NOD (notice of default) gets filed by the lender or bank in public records dept. This notice refers to the owner of the mortgage note is 90 days late and the foreclosure process ensues, the bank shells out all the admin costs and among other things the home owner now is required to pay in full plus penalties or risk the loss of their home, and in most cases takes a 7 year hit on their credit report. During this time knowing any day that an eviction notice gets pinned to the door or a knock on the door has the new buyer at auction, calling to claim their property.
Short Sales change the dynamic entirely in a positive direction. An Investor or Agent negotiates a lesser balance payoff to the mortgage note, the lender wipes this non performing asset off their books, the homeowner leaves with no costs and little damage to their credit, hence allowing quicker recovery time for their status. The Realtor or Broker gets a home to list with instant equity and faster turnover rate. The State, County starts their tax basis recovery and a new family finds their dream home while the bank or lender gets back to loaning money, all in one transaction
