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The Rise of the Short Sale

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Realtor Chris Ann Cleland says half her sales this year were short sales.
Jonathan Wilson
Realtor Chris Ann Cleland says half her sales this year were short sales.

By Jonathan Wilson

One in three Virginia homeowners are upside-down on their mortgage and the number is only slightly better in D.C. and Maryland according to the research firm First American CoreLogic.

That explains all the foreclosures but it also explains the rise in something called short sales.

Chris Ann Cleland is a realtor in Northern Virginia and she says 50 percent of the homes shes sold this year have been short sales.

That's when a lender usually a bank -- lets a homeowner sell their home for less than whats owed on the mortgage.

"Its less of a credit hit for people who sold the home but not everybody qualifies for a short sale," she says.

Cleland says short sales are not for people simply angry about falling property values in their neighborhood banks generally only accept short sale offers if you prove you cant make your payments.

Cleland says short sales are on the rise because the federal government is keeping a close eye on the percentage of foreclosures banks are holding.

"If they go beyond that certain percentage they cant lend money anymore," Cleland says.

For that reason Cleland says even if the number of foreclosures drops in the area rising short sales could put the good news on hold.

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