New Short Sale Rules Help Standardize Seller Cash Incentives
November 28th, 2012categories: Chico Sellers, Short Sales
Distressed homeowners may receive cash to move after their short sale!
On November 1, 2012 Fannie Mae and Freddie Mac launched a new, cohesive short sale program that offers several inviting incentives for a distressed homeowner. One important change is that a short sale may be allowed without the homeowner needing to have missed payments, and without the requirement of a repayment of the loan balance. A seller who has disposed of their home via short short can be on the road to credit recovery much more quickly as a result.
Fannie and Freddie has formerly processed short sales under varying sets of guidelines, and had their own versions of the Home Affordable Foreclosure Alternatives (HAFA) program, which provided a $3,000 relocation assistance incentive to a short sale seller. The guidelines, however, were restrictive, and a lot of distressed homeowners seeking a short sale did not qualify for the cash payments.
With the new guidelines in place, an owner occupant seller can receive a $3,000 relocation payment to assist with their relocation expenses with the following exceptions:
1. The seller (borrower) must contribute funds or execute a promissory note. **In California, most home sellers are protected from having to sign a promissory note or contribute funds.
2. The seller receives a Dislocation Allowance (DLA) or other government relocation assistance due to a military Permanent Change of Station (PCS) order.
3. The lender has knowledge that the seller is receiving relocation assistance funds from another source, in which case the $3,000 might be reduced by that amount.
Approximately half of mortgages in the United States are backed by Fannie or Freddie. Homeowners who have loans not backed by a Government Sponsored Entity (GSE) may be eligible for a short sale incentive offered by their bank.
BANK PROGRAMS:
Bank of America– B of A offers the HAFA program in addition to several others. The most popular program is the “Cooperative Short Sale Program” with an “Enhanced Relocation Assistance.” Payouts can be between $2.500 and $30,000. B of A’s program applies to their pre-approved short sales (a short sale that is given a preliminary thumbs up by the bank prior to the seller presenting an offer from a buyer). The value of the home is the basis for determining the incentive amount. According to the current program, the short sale has to close by September 26, 2013 to qualify for a cash payment.
Wachovia– Considered by some negotiators to be the most expedient and streamlined bank of all in terms of short sale practices, Wachovia may offer relocation assistance between $2,500 and $10,000.
Wells Fargo– Wells Fargo was offering relocation assistance between $10,000 and $20,000 to homeowners that complete a deed-in-lieu or short sale. The offer was only available on first deeds of trust owned by Wells Fargo.
Citimortgage– Citi may offer up to $12,000 as a short sale incentive on properties where Citi owns the loan. There are a variety of guidelines that determine how much a distressed homeowner may be entitled to.
Chase Bank– Chase has been known to offer incentives for a short sale up to $45,000. There are restrictions.
This is only a small sampling of banks participating in seller incentives. Be sure to call us (530) 864-5407 if you don’t see yours listed here. We’ll help you explore the options that might be available to you.
Cash incentives are being offered to home sellers to encourage short sales! Banks often do prefer short sales over foreclosure or loan modifications, and are actively working to increase the numbers of homes being sold via short sale. Short sales generally net the bank 10-25% more than they would gain via a foreclosure sale. It takes time and money to take back, maintain, market, and repair a property. It’s taken several years, but banks are beginning to streamline their short sale processes, and the option is one that is now appealing to more home sellers, buyers, and Realtors.
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