The sale of a property for less than the balance due on the mortgage loan, and with the mortgagee‘s approval. This is typically based on an arrangement between a lender (mortgagee) and borrower (mortgagor) whereby the former agrees to receive less than the total amount due. The “distressed” borrower must obtain the permission of the lender for this sale (for some acceptable excuse such as a force majeure or hardship). However, the lower amount doesn’t allow the homeowner to retain ownership. The lender receives the proceeds of the sale, while the borrower still owes the balance of the debt to the lender, unless the latter forgives the remaining amount of debt.