If you can't pay your mortgage, it soon will be easier to complete a short sale

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Struggling homeowners who owe more on a government-backed home loan than their home is worth caught a break this week.

The Federal Housing Finance Agency, which regulates the two mortgage giants that back a majority of U.S. home loans, announced new rules that take effect Nov. 1 aimed at making it easier to complete a short sale — even if you're current on your loan payments.

In a short sale, your lender allows you to sell the home for less than you owe on the loan. It is a way to avoid foreclosure.

Here are the changes:

Among the financial challenges that qualify as hardships: death of a borrower or co-borrower, divorce, disability, moving more than 50 miles to take a job, increased housing expenses, disaster (natural or man-made) or business failure.

Short sales make it possible for many homeowners to walk away without having to pay the difference between what their home sells for and what they owe.

But having one of those life events happen to you isn’t enough by itself to get Fannie Mae or Freddie Mac to forgive the difference.

If you have the assets to cover the loss, you’re going to have to pay something or risk having your lender ask the court to issue what’s called a "deficiency judgment" against you, FHFA said. A deficiency judgment gives the lender the right to collect the difference between what you owed and the amount your home sale nets.

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