When someone buys a house for 600k with no money down and then sells for 500k, it’s called “short sale”. Basically the bank must agree to take 500k and forgive the rest of the debt. For the seller it’s better than foreclosure because his credit history does not suffer as badly. For the bank it’s better than foreclosure because the bank gets 500k cash instead of having to jump through hoops, pay lawyers, hold an auction and in all likelihood end up owning a decaying house that no one wants to buy.
