The Federal Government recently announced new incentives for homeowners underwater with their current mortgage to work with their bank on a “short sale.” The new rules give timelines and parameters that offer confidence to lenders who have too often been stuck in an undefined and time consuming processes. The Obama Administration’s aim is to lessen the credit ruining aspects of a foreclosure and give homeowners and lenders a start at moving forward with the least pain.
Lenders lose about 40 percent of a property’s value on a foreclosure vs. about 19 percent on a short sale, according to industry estimates.
The program also offers $3000 in moving costs to the homeowner and some mortgage support if the owner moves into HUD approved housing. Read more about it here.