The Obama administration has announced a new short-sale program aimed at alleviating some of the roadblocks that now impede the process, which will hopefully inject some life into the nation's ailing real estate market.
According to a New York Times article, the program -- that will take effect on April 5 -- will help some of the five million households who are currently behind on their mortgages by compelling lenders to accept a short-sale arrangement in lieu of foreclosure. A short-sale can occur when a lender agrees to take less for a property than the amount owed on the mortgage, thereby avoiding foreclosure.
The program will not help everyone; those who have a second or third mortgage on their properties may have the subordinate lenders block the sale. But for those with only one loan, they will be able to get out from under a crushing burden with less of a negative impact on their credit rating, plus they will receive $1,500 in relocation assistance.
This is not a get-out-of-jail-free card. The homeowner must be able to document that they are under extreme hardship and have exhausted all their resources in an effort to stay in the home.
Our local housing market here in the North Georgia mountains has been as hard hit as most other areas of the country. The confusion surrounding short sales has only exacerbated the problem. If this new short-sale program works as promised -- and that is a big if -- this should help clear the way for renewed vigor in our housing market.
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