Why would my lender agree to a short sale or loan modification?

Simple...MONEY!!! In most distressed mortgage situations, foreclosure is a last resort for all parties involved. Simply put, both the homeowner and the lender usually want to avoid foreclosure at all costs. That is why lenders have come up with various alternatives to foreclosure, which they are typically very motivated to pursue prior to going to foreclosure. A loan modification or short sale gives the lender the ability to cut its losses upfront thereby avoiding the expense and time of a foreclosure and potentially greater losses. Lenders want to continue servicing their loans; they do not want to be in the business of owning and managing real estate. In many cases, a loan modification or short sale offers a better return on the lender’s investment than a foreclosure.