Short Sales: Nightmare or a Path to Financial Solvency?

Short sales, the hot potatoes of the real-estate market, are becoming easier to handle. Over the next three years, look for the number of short sales and mediations to grow, as the last reset of those toxic adjustable-rate mortgages comes due and major banks and their servicing divisions get more cooperative.

But throwing a line to upside-down homeowners isn't happening out of the goodness of lenders' hearts. They've just figured out that it's a smarter way to do business.

Michelle D. Plevel, broker and short sales division consultant with Chase International, says that over the past three years, lenders have learned that letting homes go into foreclosure left them holding properties that continued to devalue, and in many cases degenerated physically when left unoccupied. Not to mention the public pressure against allowing foreclosed homes to blight neighborhoods and decrease property values. "Lenders have realized that a short sale is much better," said Plevel.