A new program from the Obama administration hopes to take a plunger to the short-sale process by essentially forcing banks to accept less than the borrowed amount for a property. It will also pay those delinquent homeowners $1500 to help with relocation.
The idea is that a short sale is better for everyone — banks, underwater owners, and communities. Banks will take a hit, but less of one than if the home went into foreclosure. Homeowners will take a credit hit, but, again, less than with a foreclosure. And communities would avoid having empty, foreclosed homes sitting around.
This is economics on a grand scale, so — despite what various talking heads say — it’s really impossible to know if and how well this will work. But the Administration hopes it will be another foot helping to kick-start the economy.