For a short sale to occur, what must the lender do?

For a short sale to occur, the lender must agree to accept less than the total amount owed on the mortgage. This means the lender needs to authorize the sale and consent to the terms of the transaction, which often requires the signing of a lienholder's consent form. This form signifies that the lender is aware of and agrees to the short sale terms, thereby allowing the sale to proceed even though the sale price is less than what the borrower owes on the mortgage.

In the context of the other options, while a loan modification or cancellation of existing mortgages may be relevant in other scenarios, they are not prerequisites for a short sale. A loan modification typically involves changing the terms of the original loan, and cancelling existing mortgages does not address the need for the lender's consent to accept a reduced payment for the property. Hence, the crucial factor for a successful short sale is the agreement from the lender through a consent form.