Real Estate Law
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Because the loan is in default and foreclosure proceedings have begun, the only way she could sell the house is if the lender agreed to the sale. Also, her husband would have to sign off on the sale - even though his name is XXXXX XXXXX the title. He's acquired an equitable interest in the marital home by virtue of the marriage. Therefore, his interest must be transferred too.
A foreclosure is a process where the property is sold at public auction (process here: http://www.foreclosure.com/statelaw_PA.html).
A short sale is where the lender allows the owner to sell the property on the open market for less than the payoff amount of the loan.
Either way, the owner can be sued for a deficiency judgment unless an agreement not to do so is reached between the lender and the owner. A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures. This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan. Deficiency actions must be brought within six (6) months of the foreclosure sale.