The Treasury has set new guidelines to simplify "Short Sales".  Short sales occur when a borrower owes more than the home is worth, the borrower becomes delinquent on their loan and need to sell, the lender may be willing to accept less than what is owed.

Here are the new guidelines:

Government Announces Short Sales Guidelines

The U.S. Treasury Department announced new guidelines last week designed to make short sales go more smoothly.

To qualify under these new guidelines:

  • The property must be the home owner’s principal residence.
  • The home owner must be delinquent on the mortgage or close to defaulting.
  • The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
  • The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.

Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.

Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines.

Any further questions, or if you or someone you know may be interested in doing a short sale on their current residence, please do not hesitate to call me.  I am a certified distressed property expert and would love to help!

Derek Gutting, The Gutting Group, Keller Williams Realty, www.GuttingGroup.com, 317 846-4888.