Why would my lender accept less than what is owed on my mortgage? Lenders are in business to lend money, not to own real estate. They do not want the expense of the foreclosure process and/or the holding and maintaining of the property if it does not sell at foreclosure. The foreclosure process is very expensive and time consuming, so many lenders will agree to what seems a loss on the mortgage when they will actually save money by not completing the foreclosure and holding the property in their portfolio.
A short sale will usually result in a considerably smaller loss for the lender than a foreclosure would because of the holding time during which the property will likely sit vacant.
The bottom line is, lenders recover more money to cover their losses from a short sale than foreclosing on your property. It is a more effective measure than foreclosure.
Are you considering short selling your home?