Loan modification vs short sale
Loan modification attempts to change loan terms so an ongoing monthly payment fits your documented, stable income—if the investor’s program allows it and you qualify under underwriting rules in effect at the time.[1]
Short sale attempts to end ownership via an approved buyer transaction that clears the debt subject to written approval terms—not the same legal effect as a modification.[2]
They are not interchangeable
Some borrowers explore modification first, then shift to short sale if marketing becomes necessary. Others cannot wait for modification cycles. Discuss sequencing with professionals who see your full file. A HUD-approved housing counselor can help you compare keep-the-home and exit options before you choose a path.[3]
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Sources
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Consumer Financial Protection Bureau. If I can't pay my mortgage loan, what are my options?. Distinguishes loan modification and related keep-the-home options from sale-based alternatives.
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Consumer Financial Protection Bureau. What is a short sale?. Short sale as a lender-approved sale for less than the full mortgage payoff.
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Consumer Financial Protection Bureau. How can I find a housing counselor?. Independent counseling when comparing workout paths.