When, in August, 54.2 percent of Californians with homes on the market sold their properties at a loss, the sellers were involved in short sales. The term refers to selling a home for less than the value of the mortgage, and the owners end up still owing money on the property after they've sold it.
While it's ideal to stay in your home until the market improves, sometimes there are circumstances like changing jobs that make it impossible. Banks aren't in the business of forgiving the debt still owed in short sales, and are making the mortgage holders sign I.O.U. letters agreeing to pay part or all of the balance.