New Stimulus Subsidizes Short-Sales

The Obama administration is now offering upside down owners and their bankers incentives to shorts sales intended to avoid foreclosures.

According to the New York Times, this latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

Tags: Foreclosures, Housing Inventory, Short Sales

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