Feds Push Short Sales, but Will it Work?

Under new Treasury Department rules that take effecton April 5, short sales will be presented as the next possible step for homeowners who are not applicable for the federal Home Affordable Modification Program (HAMP).

By offering this option, the administration is acknowledging that the current mortgage modification effort "can't solve the foreclosure problem by itself," says RealtyTrac chief economist, Rick Sharga. He sees positive points in the new guidelines, such as easier, standardized paperwork, financial incentives for both homeowners and mortgage servicers, and limited payouts for second lineholders.

Short sales are not widely used. According to the National Association of Realtors, in January 2010, only 14% of home transactions were short sales. The new program is doubtful to make the short sale transaction any easier, and while it may increase the number of these transactions, some are saying it won't "live up to the hype."

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Posted on March 12, 2010 13:09:21 by Blog Author