I did look it up just now, tell me if I have it wrong here. Short sales are a tool to avoid foreclosure by asking the lender to accept less than full payout for your mortgage when you sell the house. Your lender may forgive your debt (taxable income) or they may have you make monthly payments to pay back the loan. It is usually reserved for those in financial hardship and who have to prove to the lender they are not hiding assets.