SHORT SALES — in which mortgage lenders agree to accept less than what is owed, allowing borrowers to escape foreclosure — were expected to grow easier this year after the Treasury Department proposed industry guidelines to navigate these complex transactions. But that has not yet happened, industry experts say, largely because lenders and investors who hold the liens on second mortgages and home equity credit lines often fight for a larger piece of the short sale proceeds. In late October, the Treasury Department officially adopted the guidelines, first proposed in April, which include suggestions for how these second-lien holders might be paid in such situations. Lenders and short sale specialists say the new measures could help when they go into effect in April 2010, simply because they offer some structure to a process that has often been chaotic. Until then, lenders and foreclosure counselors say,homeowners can continue to expect a painfully slow process that sometimes fails, and can ultimately lead them back to foreclosure.
By Bob Tedeschi, Dec. 11, 2009 NYT

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