What would it take to get most homeowners to move out of their house if they owed more on the house than what it’s worth AND they couldn’t make the mortgage payments? Of course, short of a wrecking ball or bulldozer! Would money talk? Would $35,000 get you going on a short sale? And avoid foreclosure?
Remember “cash for keys?” Big banks – Chase, Bank of America, CITI and others – are upping the ante by now offering cash for delinquent homeowners, not to move out, but to stay and participate in a short sale. They’re a bit tightlipped on the details, but several aspects of their programs are clear – especially the reason behind them.
Banks are literally throwing money at homeowners to short sale and prevent foreclosure and, surprisingly, it works out for all involved. Historically, the banks have had a terrible response rate from their homeowner outreach programs. Now they are wise to getting the agent and the homeowner on board by offering cash incentives for a successful short sale. The listing agent might even receive a cash bonus as well – some lenders are rumored to be paying a $1,500 bonus to the agent at the close of escrow. You want even better news? These short sale transactions tend to be quicker and more streamlined! Most can even be wrapped up – from start to finish – within 90 days, minus the hiccups of most short sale transactions. For the bank, this represents a significant savings of time and labor. The typical foreclosure remains on their books for an average of 318 days, according to RealtyTrac.
At this time, this is no way to directly request these large Non-HAFA incentives. In fact, banks are holding their incentive criteria close to the vest. Most of the information we have on how much the banks are offering is from our personal experience by helping our clients who have actually received the offer. Our suggestion is to pay close attention to any mail that is received from the mortgage lender/servicer. The incentive letters look very much like form letters and homeowners are naturally distrustful of their contents.
The amount offered varies as well; the highest amount offered that’s been documented is by Bank of America, at $35,000. The least amount offered comes from HAFA, the Fed’s foreclosure avoidance program, at $3,000. The rest fall somewhere in between: Wells Fargo and JPMorgan Chase offer between $10,000 and $20,000; while Citibank, not forthcoming with their incentive amount, is rumored to be offering $12,000, according to DSNews.com.
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