Escrow & Title
What is a 'short pay' in a real estate transaction and how does it affect the Illinois closing?
AWhen the buyer pays less than the contracted price without the seller's consent
BWhen a mortgage lender agrees to accept less than the full payoff amount to allow a sale to proceed, typically in a short sale scenario✓ Correct
CWhen the title company advances funds short of what is needed to close
DWhen the seller receives less than expected due to undisclosed closing costs
Explanation
A short pay occurs when a lender agrees to accept less than the full outstanding balance on a mortgage to allow a property to be sold. This is common in short sales where the sale price is insufficient to pay off all liens.
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Key Terms to Know
Short Sale
A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Closing CostsFees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Math Concepts
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