Lenders Paying Homeowners to Do Short Sales

Source: February 26th, 2012 in CDPE bulletin…

For awhile now, we’ve instructed agents on government incentives available to distressed homeowners who opt to do short sales. Such programs include the Home Affordable Foreclosure Alternatives (HAFA) program, which provides up to $3,000 to assist the borrower with relocation fees.

In recent news, major publications including USA TODAY and CNN Money have spotlighted the incentives provided by banks. These incentive programs, which offer anywhere from around $2,000 to upwards of $35,000, are intended to provide homeowners with the resources and motivation to pursue a short sale.

As banks look to ramp up short sales, such incentives are becoming more frequent. JPMorgan Chase began their incentive program last year, for example, and Bank of America (which plans a 60-70% increase in short sales this year) piloted a program in Florida this past December. Wells Fargo offers incentives as well, though primarily in states where the foreclosure process is particularly lengthy.

We’ve said it before, and we’ll say it again: This year looks to be the year of the short sale.

For banks, short sales can be a cheaper alternative to foreclosure. The foreclosure process is lengthy and costly, so much so that providing up to a $20,000 alternative for a short sale is still a cheaper option.

In USA TODAY’s article “Lenders Paying Borrowers to Do Short Sales”, Jim Gillespie, chief executive of Coldwell Banker, is quoted as saying “It’s a lot cheaper to shell out $10,000 or $20,000 to someone than it is to go through a long foreclosure.”

In addition to the cost of the foreclosure process itself, foreclosed properties sell for less than short sales on average. According to the National Association of REALTORS®, foreclosed properties sold for 22% less than conventional sales, while short sales sold for around 14% less.

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12 Ways to Avoid Foreclosure

12 Ways to Avoid Foreclosure

  1. REINSTATEMENT: Bring the loan current
  2. FOREBEARANCE: Temporary repayment plan
  3. REFINANCE: New loan with reduction in monthly payments
  4. LOAN MODIFICATION: Modify original loan terms or reduce principal                 (Visit: www.hmpadmin.com and contact your bank.)
  5. SHORT REFI: (New) Qualify for this process by showing a hardship as well as the ability to pay the new mortgage
  6. SELL THE PROPERTY: Use equity to pay off or pay difference
  7. RENT THE PROPERTY: Must make loan current
  8. SERVICE MEMBERS CIVIL RELIEF (SCRA): Protection for military personnel in foreclosure in specific situations
  9. HAP: Department of Defense for eligible service members and federal civilians
  10. SHORT SALE: Negotiate with bank to accept a sale less than the loan amount due
  11. DEED IN LIEU OF FORECLOSURE: “Friendly Foreclosure”
  12. BANKRUPTCY: Will stall foreclosure, but not prevent it

Pressure on Fannie and Freddie to do Mortgage Write-Downs

Pressure on Fannie and Freddie to Do Write-Downs on Mortgages

WASHINGTON, April 6 (Reuters) – The Obama administration wants Fannie Mae and Freddie Mac, which finance the bulk of U.S. mortgages, to start reducing loan balances for troubled borrowers, but with safeguards to prevent them from purposely defaulting to obtain relief.

Housing and Urban Development Secretary Shaun Donovan laid out the case for a program with such checks and balances to convince the Federal Housing Finance Agency, which regulates the companies, to provide more mortgage aid.

“This isn’t about force; this is about making the right decision for homeowners and for the taxpayers,” Donovan said in an interview taped for C-SPAN’s public affairs television that was set to air on Sunday.

Read more: US Housing Secretary Pushes Mortgage Write-Downs For Fannie Mae, Freddie Mac.

What is a CDPE?


What is a CDPE?

A Certified Distressed Property Expert® (CDPE) has a thorough understanding of complex issues in today’s turbulent real estate industry and knowledge of foreclosure avoidance options available to homeowners.

CDPEs can provide solutions, specifically short sales, for homeowners facing market hardships.

Homeowners regularly proceed without guidance of any kind through the often financially and emotionally devastating prospect of foreclosure. Speaking with a well-informed, licensed real estate professional is the best course of action for a homeowner in distress.

Through comprehensive training and experience, CDPEs have the tools to help homeowners find the best solutions for their unique situations and to avoid foreclosure through the efficient execution of a short sale.

CDPEs don’t merely assist in selling properties, they serve and help save their clients in need.

Living through financial difficulties poses a challenge for any family, so why make the process of finding a qualified real estate professional difficult too? Select an agent with the CDPE Designation to ensure you have a trained professional to address your specific needs.

If your circumstances are stressing you out, you need information and help.  Contact me now to arrange for a confidential consultation and let’s get you back on the path to stability.

Sheila Lawrence, Realtor, SRES, CDPE

e: SheilaKLawrence@gmail.com

p: 707.478.7240

Come In Out of the Cold

Come In Out of the Cold

Most likely you found your way to this site looking for answers for yourself, or for someone you know, about what can be done when a Homeowner is in danger of losing their home.  Financial hardship is draining and it’s easy to feel like you’ve failed.  But you haven’t, and you are not alone.

The way through is to make good decisions and for that you will need good, up-to-date, information.  With every bank reacting differently and policies literally changing daily, who has time to keep up with their own life AND make sense of all that is going on in the real estate world.

There are even cash incentives to help you relocate after the house sells.

The good news, and there is some, is that it is getting easier to Short Sale your home if you are not able to continue to keep up with the payments and falling further and further behind.  The really good news is that, compared to a foreclosure, the Short Sale process is much easier on you and on your credit rating.  You can potentially be in shape to purchase another home in as little as two years vs. seven years with a foreclosure.

So, welcome.  If you have questions about your own situation and would like a private consultation, contact me.  I am here to help.

Sheila Lawrence

e: sheilaklawrence@gmail.com

p: 707.478.7240

w: SheilaLawrence.com