The Treasury Department spent 2009 pushing banks to modify mortgage payments so that distressed homeowners would not be displaced. Next month, the government will start a program encouraging owners and banks to sell some of those same homes.
The program, scheduled to begin April 5, focuses on transactions known as short sales, in which a lender allows a homeowner to sell a house for less than, or short of, what is owed on the mortgage.
But even before the program has begun, it's receiving mixed reviews from real estate agents, some of whom say it will give owners incentive to sell, and others who believe banks don't have the capacity to pursue more of the labor-intensive sales.
Typically, owners seek short sales to lessen the credit damage that comes with a foreclosure. Banks have resisted the approach because it not only requires added administrative work to analyze details such as the owner's finances and property values, but also is a guaranteed loss.
Meanwhile, more than 5 million U.S. households are behind on their mortgages, and a government-sponsored program in which banks reduce monthly payments has, by all accounts, foundered.
Source: San Francisco Chronicle, Robert Selna (03/10/2010)
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