Incentives to Short Sale Vs Foreclose

It is no secret that the larger financial institutions are offering incentives for home owners experiencing difficulty with their mortgage payments to short sale rather than let the home go to foreclosure. Clearly it will take much longer and cost more money to foreclose. Foreclosures will only continue to drive prices down and keep the housing market weak in growth and recovery. I can sense the urgency with the lenders to stream line the process and get the properties off their books which is very helpful.




I think alot of us are wondering why the incentives are so high. Ranging from $15,000 to $35,000. I read an article where one person commented their opinion which made sense to me. " Are the lenders offering these large incentives for homeowners with underlying title issues and do not have the proper paper work to foreclose? With all of the previous allocations of abusive practices that have slowed the foreclosure process it is no surprise that they are taking extra precautions.



One of the concerns I have is; are homeowners going to jump at the chance to short sale their property in hopes to receive these incentives and is their decision to short sale contingent upon receiving incentives? Does this extend to mortgages backed by Fannie Mae and Freddie Mac? According to an article from C.A.R. released on 2/13/2012 it does not apply to Fannie and Freddie mortgages which makes up a pretty good percentage of loans out there. All guidelines are still unclear.



I believe this will light a fire for homeowners to make a choice to short sale sooner than later however; proper expectation should be set upfront. There is no guarantee that the homeowner will qualify. The number one incentive to short sale vs foreclose still rings true; The short sale will have less of an impact on your credit. Those who are frustrated with their current circumstances may say " I really don't care about my credit, nor do I care if I ever buy a house again." Seasons change and so do people and the things we want and desire. Wouldn't it feel better to know that even if you do not care now, if you do happen to change your mind, the option to buy is available? I like to keep my options open. It creates more possibility for the future.



Another incentive for a homeowner who has a non-recourse loan to short sale is the fact the Debt Relief Act expires at the end of this year. I believe it is not necessarily a good thing to sell to our clients cash incentives to put their home up for sale. I feel it is better to look at the facts of their situation and give them reality. Create a long term incentive to short sale instead of short term.



Tip of the day:


Citi Mortgage will not give incentives to a homeowner in a short sale if the BPO comes back higher than the offer. Whether or not their BPO is correct does not matter. If they do not counter and give an approval the incentives go away.



(Quote) You are the person who has to decide. Whether you'll do it or toss it aside; you are the person who makes up your mind. Whether you'll lead or will linger behind. Whether you'll try for the goal that's afar. Or just be contented to stay where you are.
Edgar A. Guest

Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.



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