Final answer:
In a short-sale, the buyer does not assume the unpaid balance of the original loan. The home sells for less than the mortgage balance and proceeds go to the lender, potentially leaving the seller with a deficiency balance.
Step-by-step explanation:
In the case of a short-sale, the buyer does not assume the unpaid balance of the original loan. Instead, a short sale occurs when a homeowner in financial distress sells their property for less than the amount due on the mortgage. The lender must agree to this arrangement, and after the sale, the proceeds go directly to the lender. The buyer pays the market price for the home, which is less than the mortgage balance, and the seller may still owe the remaining debt to the lender, known as a deficiency balance, unless there is an agreement in place to forgive this debt.