The Treasury Department plans to announce financial incentives for servicers to pursue short sales and deeds in lieu of foreclosure for troubled homeowners who do not qualify for the Obama administration's loan-modification program.
Under the Treasury plan, which is expected to be announced this month, servicers would get a $1,000 "success fee" when a short sale is completed, according to short sale experts who have been briefed on the policy.
The home seller would receive up to $1,500 to assist with relocation expenses, similar to the "cash for keys" programs that various servicers offer.
The article also talks about codifying just how much junior liens should take. If short sales ever become structured, where the banks basically take fair market now and all the liens divvy up the proceeds in some agreed upon way it would go a long way in liquefying the market. There are many short sales sitting waiting for an answer from the bank (see the weekly inventory reports), if that answer get reduced to a couple week time period the market will take off. It also means the foreclosure peak will have definitely passed as the distressed inventory will be moved early in the process for all but the most unwilling.