Treasury program to prompt short-selling

The government's $75 billion program to provide incentives for banks to refinance mortgages with better terms has produced far fewer loan modifications than anticipated, The New York Times reported Monday.

The new strategy involves the government paying the bank serving the loan $1,000, and paying $1,500 to the consumer for "relocation assistance."

The borrower would then sell the house at a loss, but walk away with some spending money and less of a blemish on his or her credit record and a written guarantee the bank will not sue the borrower later for the loss. Those investing in mortgages would receive more than they would in a foreclosure procedure, the Times said.

Communities would gain, because the house would have a new owner, rather than be left vacant while a foreclosure is processed.

"We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender," said Seth Wheeler, a senior adviser at the Treasury.

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