Guidelines Aim to Ease Short Sales

According to the Wall Street Journal, new Government guidelines from the Obama administration has recently laid out final guidelines that should make it easier for some financially troubled borrowers to sell their homes.

The guidelines are designed to encourage the use of short sales, transactions in which the borrower with lender approval sells the home for less than what is owed on the loan. The program also makes it easier for borrowers to voluntarily transfer ownership of properties through a "deed in lieu of foreclosure." Additionally, borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines.

Under the plan, borrowers will receive $1,500 from the government if they sell their homes for less than the amount of their mortgages. Mortgage-servicing companies will also receive $1,000 for each completed short sale. The program is open to borrowers who may be eligible for the government's loan-modification program, but don't end up qualifying, or are delinquent on their modification, or request a short sale or deed-in-lieu transaction.

Under the new guidelines, second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgages, meanwhile, can collect up to $1,000 from the government for allowing such payments.