RealTown Words

A sale of secured real property that produces less money than is owed the lender; also called a short pay, in that the lender releases its mortgage or trust deed so that the property can be sold free and clear to the new purchaser. In essence, the lender decides to cut its losses by agreeing to a negotiated sale rather than experiencing the delay and expense of a foreclosure action, with the possible result of owning the asset and thus carrying a “real estate owned” on its books. Lenders often require that the brokers adjust their commissions before the sale takes place—even though the lender is not on the title, it is often positioned to call the shots.