A short sale is when a homeowner sells a house for a price that does not cover the total mortgage debt.

Lost your home to foreclosure but still getting collection calls? Learn what a remaining loan balance (deficiency balance) is, whether you legally owe it, and how to resolve it — free consultation.

Owners might leave a property without further mortgage obligations if specific legal conditions and local regulations allow for this action. A property is considered to have negative equity when the total debt exceeds the current market price.

Banks often choose short sales because they allow the loan to be reset with a new borrower who qualifies for the reduced value of the property. Instead of continuing with an existing borrower who has already struggled to make payments, the lender can move forward with someone who has a stronger financial profile for the lower loan amount.

A HELOC (home equity line of credit) is a loan taken after buying a home that lets the homeowner borrow against equity for expenses like cars, credit card debt, or travel. These loans are generally not protected by anti deficiency statutes.