Government Announces Short Sales Guidelines The U.S. Treasury Department announced new guidelines this 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. Source: Associated Press, J.W. Elphinstone (11/01/2009) and The Wall Street Journal, Ruth Simon (11/01/2009