Final answer:
D) short-sale
Financial institutions opted for short-sale arrangements to recover some losses when homeowners couldn't make payments and the home's value had dropped below the mortgage amount.
Step-by-step explanation:
In an effort to stimulate the housing market, some financial institutions accepted a short-sale arrangement in which the proceeds of the sale of the home were less than the debt owed on the home.
This approach was taken as a means to deal with situations where homeowners were unable to continue making payments, and the value of the home had dropped below the amount still owed on the mortgage. By opting for a short-sale, lenders could recoup some of their losses without going through the lengthy and costly process of a foreclosure.
It also allowed borrowers to sell their homes and avoid having a foreclosure on their credit report, albeit they might still owe the difference between the sale price and the mortgage balance, depending on the terms of their agreement with the lender.