New Short Sales Guidelines - Are they working?

The government announced new Short Sales guidelines early in November. After talking to many of my fellow agents it appears that very little has changed in the minds of the borrowers. They still can't talk to their bank, they get different answers to the same question depending on who they are speaking to. Many homeowners have upon learning that their mortgage does not qualify because they took out the loan over a year ago shake their heads and say " I'm upside down and need help just like the fellow who took out his loan a few months later".

It seems funny to me that we have home values that have fallen to 2005 values but only those homes sold in 2009 can do a short sale! What is the logic in this? If you haven't read the new guidelines here they are:

"To qualify under these new guidelines:

• The property must be the home owner's principal residence.
• The home owner must be delinquent on the mortgage or close to defaulting.
• The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
• The borrowers' total monthly mortgage payment must exceed 31 percent of their before-tax income.

Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.

Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines."

Source: Associated Press, J.W. Elphinstone (11/01/2009) and The Wall Street Journal, Ruth Simon (11/01/2009)