This is Listing… with panoramic views in Seattle, Washington. But, on with the story.

An increasing number of lenders are going after borrowers who sell their homes for less than they owe – known as a short sale – in order to recover more of the difference between the amount owed and the sale price.Lenders say the factors that they consider when they decide to seek more money are: 

• How large was the unpaid debt?
• Was the property an investment or a personal residence?
• How much money does the borrower make and what other assets does he have?
• What is the policy of the mortgage insurer or the holder of the second lien? 

A PMI Group Inc. spokesman says the mortgage insurer “primarily target[s] borrowers who are not experiencing hardship – but those who simply elected to walk away from the property due to its decline in value

Source: The Wall Street Journal, Ruth Simon (04/30/2009)

In real estate, a short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the mortgagor. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, usually in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. 

In some cases as mentioned above, the banks are not willing to just let go of the mortgage without further compensation.  In many cases, this has led to foreclosure in lieu of a short sale.