The U.S. Treasury Departmen has launched a new 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 Progran (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:

• Usses a borrowers financial and hardship information collected in conjunction with HAMP to determine eligibility
• Allows borrowers to receive pre-approved short sale terms PRIOR to listing the property
• PROHIBITS the servicer from requiring, as a condition of approving the short sale, a reduction of the real estate commission agreed upon in the listing agreement.
• Requires teh borrowers to 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.

A complete description of the program can be found on the HAMP website at bit.ly/6ubGGe