The U.S. Treasury Department has launched a program that will provide financial incentives to mortgage servicers and borrowers who use a short sale or a deed-in-lieu to avoid foreclosure on a loan facilitated through the Home Affordable Modification Program (HAMP). HAMP aims to simplify and streamline the use of short sale and deed-in-lieu options so they are more viable alternatives for borrowers. The program:
— Uses a borrower’s financial and hardship information collected in conjunction with HAMP to determine eligibility.
— Allows borrowers to receive pre-approved short sale terms prior to the property listing.
— Requires that borrowers be fully released from any future liability for the debt.
— Provides financial incentives to borrowers, servicers and investors.
— The guidelines become effective April 5, 2010.