Last month Chase Bank paid two of our clients a total of $55,000 in cash incentives to do short sales. May 10, one of our clients received a $25,000 short sale cash incentive, and May 29 another client of ours received a $30,000 short sale cash incentive.
Chase Bank offers these incentives to struggling home owners who can no longer afford their mortgages to do a short sale rather than letting the homes fall into foreclosure. More banks are realizing that this is a better solution for everyone involved.
Do You Qualify?
For example, recently Bank of America announced a new program that offers struggling homeowners between $2,500 and $30,000 if they sell their home through a short sale. Last month we negotiated a large cash incentive with Bank of America for $10,000 for one of our clients to do a short sale. (The amount of the incentive depends on several factors depending on the home.) Now Chase is starting to offer more of these large cash incentives to distressed home owners.
We have had large short sale cash incentives from Chase bank before. Last November, along with Dorner Law we negotiated a $35,000 payment from Chase Bank for our client. We’ve done many more large short sale cash incentives for our clients, but this makes two large incentives from Chase Bank in just one month. Big banks like Chase are ramping up their efforts to offer more incentives like these to distressed homeowners to do short sales to avoid going through a costly foreclosure process.
Why Do Banks Offer Short Sale Incentives?
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—even large incentives like the two Chase offered this week—costs less for banks than starting the foreclosure process on the property.
29 percent of the short sales we have closed received some kind of cash incentive so far this year. The average cash incentive for our short sale clients is $2,932.05. 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.
Do You Qualify?
I simply don’t believe this article. Chase bank has turned down 4 short sale offers on our home. At one point the home was valued at $170,000 and the short sale amount was $168,000 on a loan balance (not including late fees and past due payments) of $159,000. Chase’s remarks were that the short sale must be reasonable to cover all of the late payments, fees and penalties. This bank has suggested on numerous occassions that we do a “deed in leiu of forclosure.” We simply do not see a desire to complete a short sale with this greedy institution.
Scott, Thank you for reading our blog. Just so you know it is 100% true we complete multiple short sales on a weekly basis with Chase. In fact we have been doing short sales with Chase since 2006. Please see our sample approvals link http://www.shortsalene.com/short-sale-approvals/. Who you hire to complete your short sale also makes a big difference. Please look at our video on how not every agent can do a short sale http://www.shortsalene.com/not-every-real-estate-agent-can-do-a-short-sale-video/. If you have any other questions or would like to talk to us directly please feel free to call us at anytime 800-924-6563.
-John and Anthony
I just wanted to tell you that I received a $25,000 incentive from Chase on our AZ home. In the midst of trying to get a modification, we suddenly received the Chase offer.
I personally believe the reason it was done was because our assignments were not done correctly and they had inherited a potentially fradulent loan. The bought out my old lender, so it wasn’t their fault but when you look at the paperwork, the original mortgage broker screwed up and lied to us. At any rate, they offered the incentive and we did receive it.
In addition to the $25,000, we also received the federal money, can’t remember the name but was about $3,000.
As a side note, they were hard to deal with and made it seem like they didn’t really want to give the incentive, but my real estate agent was experienced and persistent.
Here is my question, thought you may be able to help me with. Will this incentive now be taxable next year on a 1099?
Thanks!
Hi Mitch,
Federal taxes on mortgage debt forgiveness are covered under the 2007 Mortgage Relief Act, but this Act is set to expire December 31st of this year. Please read http://www.shortsalene.com/tax-implications-of-a-short-sale/ for more information on paying taxes on forgiven debt.
I also have the same question as the person above. I know the short sale amount is not taxable. However is the short sale incentive taxable.
Hi Kija, the incentive can be considered taxable income. Speak with your tax professional to determine how this will impact your finances.