Proposed settlement would force banks to allow short sales for delinquent homeowners

Proposed settlement would force banks to allow short sales for delinquent homeowners
The proposed deal among banks and government officials is aimed at stabilizing the real estate market and helping underwater borrowers who are months behind on mortgage payments avoid foreclosure.

A proposed settlement would force banks to allow underwater borrowers… (Joe Raedle, Getty Images)
March 30, 2011|By Jim Puzzanghera and Alejandro Lazo, Los Angeles Times
Major banks may be forced to let severely delinquent homeowners sell their houses for less than the loan amounts owed as part of a broad settlement of federal and state investigations into botched foreclosure paperwork, according to government officials involved in the negotiations.

The requirement to allow so-called short sales would be in addition to forcing mortgage servicers to reduce the amount some homeowners owe on their loans, said two officials, who spoke on the condition of anonymity because negotiations are ongoing.