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Getting paid to sell home at a loss

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration's most aggressive attempts to grapple with a problem that has defied solutions.

More than 5 million households are behind on their mortgages and risk foreclosure. The government's $75 billion mortgage modification plan has helped only a small slice. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy's tentative recovery.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

"We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender," said Seth Wheeler, a Treasury senior adviser.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in "relocation assistance."

On the Sunday

talk shows

• Senate Minority Leader Mitch McConnell of Kentucky denounced a recent GOP appeal to party donors that was based on stoking fear and negative feelings. President Barack Obama was depicted as "The Joker" and House Speaker Nancy Pelosi as Cruella De Vil. McConnell told ABC's This Week Sunday that it's up to the Republican National Committee to hold someone responsible: "I don't like it and I don't know anybody who does."

• Sen. Lindsey Graham, R-S.C., said on CBS's Face the Nation Sunday that if the president agrees to try alleged Sept. 11 mastermind Khalid Sheik Mohammed and four accused henchmen in military tribunals, he will press fellow Republicans to vote to close the Guantanamo Bay prison.

Associated Press

Getting paid to sell home at a loss 03/07/10 [Last modified: Sunday, March 7, 2010 10:23pm]

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