Default on home Loan that is 3rd of Market Value

Hi All,

I am gathering data on default notices, running numbers and trying to understand/evaluate what might be an opportunity in the pre-foreclosure arena.

How can it be that some loans are maybe only a 3rd of what the market value is? Will lenders even negotiate a "short sale" (it wouldn't really be a short sale right, would really only need to buy at loan value and would be great deal) with these or will they most likely try to sell themselves?

Thanks in advance, I'm trying to wrap my head around all this - very new :-)

Thanks!
Steph