As a result of the financial crisis of 2008-2009, some financial institutions accepted a ________ arrangement in which the lender accepted the proceeds of the sale of a home as full payment on the debt owed even though the proceeds were less than the debt owed.

Question

Quizplus · Accepted Answer

The correct term for the arrangement described is a "short sale." In a short sale, the lender agrees to accept the sale proceeds of a home as full payment for the mortgage, even if those proceeds are less than the amount owed. This often occurs when the homeowner cannot afford to keep the home and the value of the home has fallen below the balance of the mortgage, especially notable during the financial crisis of 2008-2009.

As a Result of the Financial Crisis of 2008-2009, Some