Homeowners with an underwater mortgage are, simply put, in a bad situation with their home and many are looking to just get out of the situation. Short selling may be one of the best ways in which a homeowner can do so, but in the past, short sales were not easy to come by, necessarily, and homeowners often would still end up owing the bank.
However, a new incentive program from the Obama Administration is offering banks, primary and secondary lenders, money if they make short sales and help underwater homeowners out of their mortgage obligation on a home that has seen a big drop in value. Many lenders are working with underwater homeowners with principal reductions and short sales in the hopes that homeowners will not just walk away from their homes.
While no homeowner is guaranteed to profit from their home nor is a homeowner assured that the price of their home will increase, homeowners that are looking at homes that have dropped so much in value that they are unsure if they can ever make a profit if they choose to sell are just asking for a break.
Short sale incentives are hoped to get more banks to find buyers for underwater homes and allow the current homeowners to leave their underwater mortgage without sustaining substantial damage to their credit. Many caution homeowners that are looking to short sale to be sure they get a short sell that is going to leave them free from owing their bank, as that would make short selling pointless for a homeowner.