Are you kidding me? The Banks are just now paying homeowners to get out of a house they can’t afford anymore? They should have been doing this years ago instead of dragging out the short sale process and then delivering the big “No” months later. And then letting the house go through the foreclosure process, which eats up more time and costs them even more money in the process. Here’s one for you: “The banks have realized, ‘We are losing more on the foreclosures than the shorts,'” Augustyniak said. “And they are even willing to compensate the sellers, to give the sellers money to vacate the property.” Wow! What a revelation! Any half-assed Real Estate investor straight out of a short sale seminar in 2006 could have told them that. Guess it takes a while to sink in.
Chase Puts Their Money Where Their Mouth is With Large Short Sale Cash Incentive
McGeough Lamacchia Realty and Dorner Law negotiate a $35,000 payment to their short sale client at closing.It’s important for people who cannot pay their mortgage to be proactive with an alternative such as a short sale.
Chase Bank sent a homeowner (name withheld) a solicitation letter offering up to $35,000 to do a short sale. Back in August the homeowner called McGeough Lamacchia Realty right away and the home was listed for sale within two weeks.
Once an offer was obtained the staff at McGeough Lamacchia Realty and Dorner Law submitted a short sale package to Chase along with their solicitation letter to remind them that this $35,000 was offered. After five weeks of negotiating Chase not only offered a short sale approval and waived the entire deficiency balance but they agreed to pay this homeowner the entire $35,000.
Over the past year more major banks have realized that paying distressed homeowners a substantial sum is a great way to incentivize them to move out of the home they can no longer afford. Chase has been sending out these solicitation letters of up to $35,000 for about a year. Citi Mortgage has been paying up to $12,000 for about 6 months and Bank of America has most recently agreed to pay up to $20,000.
McGeough Lamacchia Realty and Dorner Law have negotiated large sums for its clients before, but this $35,000 is a new record that they are proud of. These programs are only offered on the loans where these banks actually own the mortgage. Most mortgages are being serviced by the large banks on behalf of one of the three GSE’s: Fannie Mae, Freddie Mac, and FHA (Federal Housing Administration). FHA does offer a $1,500 incentive to do a short sale under their Pre-Foreclosure Sale program. Fannie Mae and Freddie Mac do not currently offer any money unless the short sale is through the Treasury’s HAFA program.
Under the Treasury’s HAFA (Home Affordable Foreclosure Alternative) program which came out in April 2010, lenders are paying $3,000 to distressed homeowners who complete a short sale through the HAFA program.
“It is clear that the major banks have woken up and realized that a short sale is the best way to decrease losses and assist distressed homeowners in a graceful and dignified exit from their home. It’s unfortunate that Fannie Mae and Freddie Mac still haven’t seen the light,” says Anthony Lamacchia.
Short sales are increasing across the country for several reasons:
- They are becoming better known to distressed homeowners.
- Banks have realized that they save tremendous money through a short sale vs. a foreclosure
- Banks have finally hired more staff and are working hard to better their short sale processes
- All the major banks are now sending out letters offering short sales to homeowners who cannot qualify for a loan modification. Bank of America recently came out with a Home Transition Guide.
- Banks recognize that the sooner they get out of a non-performing loan the more money they save.
“I did my first short sale 20 years ago. They are a great alternative to foreclosure and it is nice to see more distressed homeowners are finally opting for them, especially now that these great incentives are being offered,” says Attorney Hillery Dorner.
Nationally short sales have increased 12% in 2011 and many believe they will increase by much more in 2012.
“One thing distressed homeowners need to know now is that banks will be foreclosing much faster in 2012 than they did in 2011 due to these robo-signing issues for the most part being worked out. Therefore it is important for people who cannot pay their mortgage to be proactive with an alternative such as a short sale,” says John McGeough.
For more on this story, visit the New England Short Sale Blog
About McGeough Lamacchia:
McGeough Lamacchia is the #1 Listing Agency in Massachusetts and named one of the Top 100 Real Estate Teams in the country by RealTrends and the Wall Street Journal. They are a full service real estate agency specializing in short sales in Massachusetts and New Hampshire.
So there you have it. All you seminar graduates, go out there and make some money.