Fredrick purchased a property worth $150,000 on mortgage.He had paid $30,000 as a down payment on this property.However,because of a recent slump in the real estate prices,the property is worth only $110,000,forcing Fredrick to sell the property.Assuming that no mortgage payments have been made by Fredrick,this sale is termed a(an)_____.

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A real estate short sale occurs when the sale price of the property is less than the outstanding mortgage loan balance, and the lender agrees to accept the proceeds of the sale as full payment of the mortgage debt. In this case, Fredrick owes $120,000 on the mortgage ($150,000 - $30,000 down payment), but the property is only worth $110,000, so he cannot sell it for enough to cover the mortgage debt. Therefore, he needs the lender's approval for a short sale. A declining equity situation is one where the property value is decreasing over time and the owner owes more on the mortgage than the property is worth, but it does not necessarily involve a sale. The other options (C, D, and E) are not applicable in this scenario.

Fredrick Purchased a Property Worth $150,000 on Mortgage