Selling a home below the current moertage amount create a “short” sale. This minimizes the damage to the seller’s credit and minimizes the financial loss of the lender, as well as minimizing the fall of the local market prices. Good for all, right? Except it takes a long time, and many buyers can’t or won’t wait.
The new Treasury Department rules may improve the situation for some, but in most cases don’t go far enough to have real impact, such as the $1,000 offer to lenders to cover their admin costs, or the $3,000 offer to cover losses of second mortgages, which can be hundreds of thousands of dollars.
It will be some help for pricnipal residences, delinquent loans, and loans made before 2009.