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.