“Short Sales” Are Being Added To Housing Rescue Plan

Homeowners having financial difficulties and in fear of losing their homes to foreclosure could be helped by the newest addition to the government’s housing-rescue plan. It entails a standard process and incentives for a short sale. It will simplify the process for borrowers to transfer ownership of their home to the mortgage company through a “deed in lieu” of foreclosure. This will benefit the buyer because they avoid “foreclosure” and it will benefit the lender because they will avoid the high foreclosure expenses and large amount of time it takes to complete the process. This year, short sales have increased to 20% of all home sales. Compared to foreclosure, a short sale is less costly to the lender, but for the buyer it must be approved and can take up to four months to complete. The government plans to pay mortgage-servicing companies up to $1,000 and borrowers up to $1,500 for completed short sales and “deed in lieu” of foreclosure.  These incentives will help make the process go faster.

For more information on the government housing-rescue plan see USA Today for common questions.