Banks are accepting short sales as a way of settling their mortgage debts in record numbers. Why?
With rampant loan defaults, lenders are inundated with foreclosed homes. They want to clear out their inventory and stop the flow of more properties into their portfolios.
Accepting less than the amount owed now is more attractive than going through the lengthy and expensive process of a foreclosure, taking the property back and having to market and sell property with little chance of recovering the full amount due the bank. A foreclosure can be more costly to the bank than a short sale even though the return is substantially less than what is owed.
