31% of the short sales we have closed received some kind of cash incentive this year. The average cash incentive for our short sale clients is over $3,200.00. We also work with the bank to get the deficiency balance on the mortgage forgiven. Having the debt forgiven and having cash at closing to relocate to more affordable housing is a much better option for struggling homeowners than letting the home go into foreclosure.
What is Short Sale Relocation Assistance?
All major servicers are now offering cash to homeowners to do a short sale through the HAFA (Home Affordable Foreclosure Alternative) program rather than allow their homes to go into foreclosure. For homeowners who can no longer afford their homes, the HAFA Program has become very successful and we have been able to get over 100 of our clients into it. HAFA is short sale program under HAMP (Home Affordable Modification Program) that offers $3,000 in relocation assistance. In addition to compensation for moving expenses, homeowners do not have to pay the mortgage deficiency after the property is sold.
We compiled data from MLS and found that short sale homes sold for 24% more than foreclosed homes in Massachusetts in 2011. That substantially decreases the loss for banks. This is why many of them are now paying incentives for distressed homeowners to do a short sale.
Offering cash incentives makes much more sense financially for banks than going through with a foreclosure. Foreclosures are costly and time consuming for banks. Banks aren’t in the business of owning and maintaining properties. Every month home owners don’t pay their mortgage bank lose money, and the home may even lose value during this time. So in the end, a cash incentive costs less for banks than starting the foreclosure process on the property.
How Much Are Short Sale Sellers Getting?
Some major banks such as Bank of America, Chase, and Citi are paying their own incentives on their own loans. Last year Chase began offering the largest short sale incentive to distressed homeowners which can be as much as $45,000. In October of 2011 we were able to obtain our first large Chase Bank short sale incentive for one of our clients. Since that time we have done a few more and many smaller ones.
In all we have negotiated over $269,000 in relocation assistance for our short sale clients this year.
If you can no longer afford to stay in your home, contact us about doing a short sale.Do You Qualify?