New short sale incentives were put in place Monday, designed to cut down on foreclosure rates in the US.

In a short sale, the owner sells his house for less than what is owed on the mortgage. Banks and real estate agents work together to determine an acceptable price – and if a purchaser will pay for the home, it keeps the house out of foreclosure.

In that instance, the bank walks away with at least a portion of what the house is worth, while the homeowner is able to walk away from a huge debt.

The new incentives are part of the latest attempt by the Obama Administration to slowdown the rising tide of foreclosures across the nation – called the Home Affordable Foreclosure Alternative.

To make short sales more attractive to banks and to sellers, under the program, the government will pay $1,500 to the banks for accepting the sale. Second mortgage holders – who often delay approval of short sales for months – will receive $6,000. Those selling their home will receive $3,000 to help with expenses involved in moving out of the home.

Before moving forward on a short sale, borrowers must exhaust other possibilities first.

“The borrower has to go through the modification process,” said Wells Fargo vice president Hugh Rowden. “If they fail the modification process, and were not able to modify their loan for some reason, they can take a look at another exit from the property – in this case it may be a short sale.”

Rowden says if the bank owns the mortgage, the short sale process will take far less than the two to three months it currently takes — but if a second or thirrd mortgage is involved, the process could take considerably longer.

Homeowners interested in this process, should call the Florida Short Sale Company at 941-575-9775.