Rules unveiled to speed housing short sales

Date: Dec. 2nd, 2009
Contact: Denver Post The Associated Press
The Treasury Department unveiled sweeping rules this week to help financially troubled homeowners who need to sell but can't get a price high enough to pay off their mortgages. Homeowners will even get $1,500 to help cover their moving costs.

The plan is designed to help homeowners who don't have the income or debt levels to qualify for a loan modification under the Obama administration's $75 billion Making Home Affordable program.

The plan establishes timelines, a standard process and documents, and cash incentives for participation.

"There's always efficiency with uniformity," said Vicki Vidal of the Mortgage Bankers Association. "It makes it easier for the parties involved to know what to expect."

"Short sales" reduce the damage to the borrower's credit record and save the lenders the cost of foreclosure. Short sales also help property values because the sales price is usually higher than what it would be in a foreclosure auction.

To qualify under the new guidelines:

• The property must be the home owner's principal residence.
• The homeowner is delinquent on the mortgage or default looks likely.
• The loan was made before Jan. 1 this year and is less than $729,750.
• The borrower's total monthly mortgage payment exceeds 31 percent of before-tax income.