Cash Offers to owners who agree to a Short Sale

If you are a homeowner on the verge of defaulting on your mortgage, a short sale is most likely one of the options you would consider to stop foreclosure. Usually, the process involved can become complicated and lengthy, causing many distressed homeowners to lose patience.

But in the past couple of weeks, there has been news of lenders offering cash to homeowners so they will agree to a short sale. The lenders, Wells Fargo and JPMorgan Chase, choose delinquent borrowers and give them as much as $20,000 for agreeing.

Such offer usually falls under the “cash for keys” foreclosure alternative, wherein the lenders pay the owners to move out and make sure the property is in good shape when they do. By accepting the cash, the homeowner also becomes eligible to a $3000 incentive from the federal government if the short sale is completed under the Home Affordable Foreclosure Alternative program.

It seems that the decision of these lenders to offer cash in exchange for short sale is fueled by their desire to cut costs especially considering foreclosure expenses can be quite high. According to Chase, it has completed over 110,000 short sales all over the nation since 2009.

Meanwhile, Wells Fargo prefers offering cash to Florida homeowners particularly because the foreclosure process in the state has lengthened considerably. Nowadays, an average foreclosure can take as long as 619 days, which is 30 percent more compared to last year.

News like this makes you believe the lenders are coming to their senses and realizing a foreclosure will do more harm than good not only to the borrower but to them as well. In any case, these banks are not making announcements on how they go about making such offers and what the criteria is.

In case the banks come knockin’, just be sure you are dealing with legitimate representatives. One should also keep in mind, although these plans are available, many lenders find loopholes to make sure the homeowner does not qualify. A small percentage of people will actually get this incentive. The ploy is, lenders like to, “look like” they are doing everything to help. This is what big companies do to make their corporate appearance look nice to the public. Never forget, these programs are not laws, they are voluntary programs.

Lenders Now More Inclined to Accept Short Sale Proposals

It is a fact the foreclosure mess was the result of unscrupulous lending practices. Unfortunately, it did not stop there as federal regulators continue to investigate allegations of illegal foreclosures and penalize lenders who are found guilty.

With such heat experienced by the banks to make sure they are following proper and legal foreclosure process, it is not surprising why many have become more accepting of short sale proposals.

Short sale transactions used to be looked at by some banks with skepticism, thinking the homeowners are only trying to get out of their mortgage obligations by selling their homes at an amount less than what they owe in mortgage.

But banks are realizing, albeit slowly, the situation has actually changed with the mortgage collapse. It is actually no longer surprising for a homeowner to apply for a short sale or loan modification considering home values declined considerably and the national economy is in recession.

With a short sale, it is actually a win-win situation for everyone. The homeowner gets to pay off their mortgage debt while the banks save money on foreclosure costs and recover some of their losses. Even buyers of short sales benefit since the properties come with almost a guarantee of instant equity as soon as home values climb once again.

Even the federal government sees short sale as a valid foreclosure alternative and offered incentives to banks and mortgage lenders if they successfully completed such transactions.

Of course, although short sales are gaining popularity, the process involved is quite complicated. Distressed homeowners and short sale Realtors should work hand in hand to prepare the necessary documents and find a buyer who can stick around and wait for the lender to approve the sale or make a counter offer.

It takes some time but the benefits will certainly motivate you.

Short Sale: Helping Stabilize the Housing Market

When you hear about a short sale, what usually come into mind are distressed homeowners looking for a way out of their mortgage problems. But these days, short sales have fast become the solution to the enduring crisis in the housing industry.

News reports involving foreclosure statistics are showing an increasing number of short sale transactions. Most markets hit hard by the mortgage mess are actually enjoying an improved home sales activity with short sale homes accounting for almost half the total sales.

Such data only goes to show two things — investors and home buyers are taking full advantage of the benefits of buying short sale homes while lenders are finally waking up to the reality that a short sale might just be the answer to their problem with ballooning inventory. As long as there are distressed owners and buyers interested in saving money and at the same time earning considerable return on their investment, lenders will be able to keep their foreclosure numbers at bay.

Even federal regulators have started to realize the benefits of encouraging short sale transactions on the national housing market. In fact, they are even offering incentives to both lenders and borrowers who will choose the short sale route over foreclosure.

Of course, at the end of the day, a short sale allows a homeowner leave their home with their credit score relatively unblemished. It also allows them to avoid having to suffer through the embarrassment of a foreclosure.

Short sale buyers as well as foreclosure investors do not know it yet but they are actually the ones who are helping the housing market get back on its feet again. It would certainly seem that choosing to buy a distressed property will not only give you rewards in the form of profit and savings but you also get to feel good about how you have helped neighborhoods reduce the negative impact abandoned properties have on home market values.

Hopefully, more buyers realize the wisdom of buying short sale homes and not focus on the fact that such transactions can still be lengthy.