Oregon 30-Hour Real Estate Law Practice Test

What typically happens to a homeowner during a short sale process?

1. The homeowner receives full profits from the sale

2. The homeowner may still be responsible for remaining debts

3. The homeowner can retain ownership after the sale

4. The homeowner automatically clears all liens on the property

The correct answer is: The homeowner may still be responsible for remaining debts

During a short sale process, it is common for a homeowner to still be responsible for remaining debts. This occurs because a short sale involves selling the property for less than the amount owed on the mortgage. While this arrangement allows the homeowner to avoid foreclosure and may provide some relief, it does not typically erase all financial liability associated with the mortgage. In many cases, the lender may still have the right to pursue the homeowner for the difference between the sale price and the amount owed, known as a deficiency judgment. This means that even though the property is sold short, the homeowner could still face challenges in settling the remaining debts. In contrast, the other answers do not accurately reflect the short sale process: homeowners do not receive full profits from the sale as it typically covers only part of the mortgage debt, they do not retain ownership after the sale, and they do not automatically clear all liens—lienholders may need to approve the sale, and some debts might remain. This aspect of ongoing financial responsibility is a critical consideration for homeowners contemplating a short sale.