NEW YORK (Reuters) –
General Electric Co and Vivendi SA have agreed in principle to a deal in which GE would buy the French company's 20 percent stake in NBC Universal for $5.8 billion, a source familiar with the matter said on Monday, paving the way for Comcast Corp's proposed joint venture with GE.

The agreement is mainly the result of a meeting between GE Chief Executive Jeffrey Immelt and Vivendi's CEO Jean-Bernard Levy in Paris last week, where the two parties made progress on the talks that had been going on for weeks, the source said.

GE and Comcast declined to comment. A Vivendi spokeswoman did not immediately return a call seeking comment.

Vivendi had originally valued its 20 percent stake in NBC Universal, acquired in 2004, at $6.1 billion, sources told Reuters earlier this month. But the two sides differed on that valuation, slowly narrowing their gap over the past few weeks. GE, which owns the remaining 80 percent, had offered around $5.6 billion about 10 days ago, a source had said then.

The two sides also have differed on when Vivendi would get paid: Vivendi initially wanted the entire payment upfront, while GE wanted to pay after its deal with Comcast closed. On November 20, a source familiar with the negotiations told Reuters that Vivendi had agreed to accept payment for one-third of its stake until the deal with Comcast closes.

The negotiations between Vivendi and GE have been holding up Comcast's plan to form a joint venture with GE by buying a controlling stake in NBC Universal, in what would be the biggest media deal this year. The two sides have valued NBC Universal at about $30 billion.

As part of that proposed deal, NBC Universal would become 51 percent owned by Comcast and 49 percent by GE. Comcast would contribute around $4 billion to $6 billion in cash, as well as its collection of cable networks to pay for its stake.

But for that deal to happen, GE has to buy out Vivendi's stake first. With the tentative agreement between GE and Vivendi, an announcement on the Comcast-GE deal could come in the next few days, two sources familiar with the matter said.

BIGGEST MEDIA DEAL

Under the terms of the proposed deal, the new company is expected to be able generate cash to pay down $9 billion in debt that would be added to its books as part of the agreement. It would use that debt to buy the rest of the company from GE.

GE has negotiated a redemption option that would give it the right to redeem all or part of its stake in the new company in exchange for cash at the 3-1/2-year mark and at a 7-year mark, sources have said.

Comcast has long wanted to buy media assets to create a content powerhouse spanning broadcast TV, cable and film. Chief Executive Brian Roberts said last month he would look at all opportunities in content.

Many of GE's shareholders have urged the conglomerate to offload NBC Universal, whose broadcast and cable networks, movie studio and theme parks are considered misfits among GE's mostly industrial operations.

(Reporting by Jui Chakravorty; Additional reporting by Anupreeta Das; Editing by Richard Chang and Carol Bishopric)

The stock market closed out its best month since the summer, posting big November gains even as investors worried about the strength of the holiday shopping season. Stocks zigzagged Monday but finished modestly higher as traders ultimately were not deterred by reports that retail sales were overall uninspiring during the Thanksgiving weekend. Retailers including Macy's Inc. and Saks Inc. fell sharply but online merchants like Amazon.com Inc. shot higher on reports of strong Internet sales.

The Dow rose 34.92, or 0.3 percent, to 10,344.84.

The S&P rose 4.14, or 0.4 percent, to 1,095.63.

The Nasdaq composite index rose 6.16, or 0.3 percent, to 2,144.60.

For the year:

The Dow is up 1,568.45, or 17.9 percent.

The S&P is up 192.38, or 21.3 percent.

The Nasdaq is up 567.57, or 36.0 percent.

NEW YORK (Reuters) –
The U.S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed "short sales" of homes and other loan modification alternatives to stem a rising tide of foreclosures.

The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed, according to an announcement on the Treasury's website.

Guidelines address barriers that have often sidelined short sales by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims of subordinate lenders.

The incentives, first announced in May, expand on the government's Home Affordable Modification Program, known as HAMP, that has seen limited success in lowering payments for distressed homeowners. The Treasury earlier on Monday stepped up pressure on mortgage companies to make permanent the 650,000 trial modifications they have started.

"While HAMP program guidelines are intended to reach a broad range of at-risk borrowers, it is expected that servicers will encounter situations where they are unable to approve" or offer a modification, the Treasury said in its announcement.

Financial incentives for completing short sales or similar deed-in-lieu transactions -- in which the deed is simply transferred to the lender -- include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would receive $1,500 in relocation expenses.

Short sales are favored by real estate agents and community groups over foreclosure because they can preserve the borrower's credit rating and leave the property in better condition than when a homeowner is evicted. While primary lenders typically realize steep losses, their recovery is typically far better than under foreclosure.

But short sales have been frustrating for borrowers and real estate agents, often hung up by negotiations with multiple lien holders and mortgage insurance companies. Real estate agents have complained that sales fall through as lenders bicker over the sales price, what they should receive from the proceeds, and whether the borrower will be held accountable for the debt in the future.

Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt.

It also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.

In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.

Second lien holders in recent months have begun demanding more money from the first lender, seller, buyer or agent in exchange for releasing their claim, agents have said. Because primary lenders would face larger losses in a foreclosure, some subordinate lenders have felt empowered, the agents said.

The largest second-lien holders are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co and Citigroup Inc.

Second lien holders may proceed with a short sale outside of the Treasury program, if they felt the cap was too low, a Treasury official said in October.

"If there was a short sale program that didn't recognize the second lien holder position, it could have pretty damaging consequences for the industry," Sanjiv Das, chief executive officer of CitiMortgage, said in an interview last week.

(Editing by Leslie Adler)