A Maryland homeowner is three months behind on her mortgage payments and has received a Notice of Intent to Foreclose. Her real estate agent suggests she consider a short sale. Which statement accurately describes the short sale process in Maryland in the context of foreclosure avoidance?
Correct Answer
B) The lender must approve the short sale, and any deficiency may be waived or pursued depending on the agreement
In a Maryland short sale, the homeowner sells the property for less than the outstanding loan balance with the lender's approval. The lender must agree to accept the reduced proceeds as full or partial satisfaction of the debt. Whether the lender waives the remaining deficiency or reserves the right to pursue a deficiency judgment depends on the specific short sale approval letter negotiated between the parties. Agents must advise clients to obtain written confirmation of deficiency waiver from the lender before proceeding.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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