If no one approved of people walking away from their distressed homes, now the Obama administration wants to pay you to walk away from your short-sale home by asking you sell at a loss. More about the program, which kicks into effect on April 5th, from the New York Times: "To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.
Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”
Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure." How exactly this will play out isn't clear, according to the paper, which notes, among other things, short sellers can have multiple mortgages on their homes, and the larger banks only administer the mortgages, but don't own them. But from the point of view of the seller, this process could be helpful because their credit won't be hurt. Additionally, this ensures the home doesn't go into foreclosure.
· Program Will Pay Homeowners to Sell at a Loss [NYT]