Relocation Incentive | Short Sale Agents | Fannie Mae | Freddie Mac | Riverside Real Estate | Riverside Short Sales
New short sale rules standardize seller cash incentives
New short sale guidelines may make it easier for a distressed homeowner to receive cash to move after a short sale.
Mortgage giants Fannie Mae and Freddie Mac on Nov. 1 launched a revamped and cohesive short sale program that, among other things, allows a short sale without missed payments and without requiring repayment of the loan balance.
The government-sponsored enterprises formerly processed short sales under varying sets of rules and even had their own versions of the Home Affordable Foreclosure Alternatives (HAFA) program, which provided a $3,000 relocation incentive to the seller. But the guidelines were restrictive and many distressed home sellers were disqualified for the cash payments.
Under the new guidelines, an owner-occupant home seller is entitled to a $3,000 relocation check to assist with relocation expenses, with the following exceptions:
- The borrower is required to contribute funds or execute a promissory note. In California, laws protect most home sellers from having to contribute funds or sign a promissory note.
- The borrower has military Permanent Change of Station (PCS) orders and receives a Dislocation Allowance (DLA) or other government relocation assistance.
- The servicer has knowledge that the borrower is receiving relocation assistance from another source. In this case, the $3,000 would be reduced by a like amount.
Fannie and Freddie back about half of U.S. mortgages. For homeowners whose loans are not covered by one of the GSEs, many banks offer short sale programs that provide relocation incentives.
OTHER BANK PROGRAMS
HAFA PROGRAM: More than 40,000 short sales have been completed through the federal HAFA program, which provides a $3,000 relocation incentive for the homeowner.
The U.S. Treasury version of the program allow $8,500 to satisfy junior liens, making the program a better alternative for California homeowners, who are more likely to have high-balance home-equity loans.
Many banks participate in this program, though not all homeowners fit the mold.
BANK OF AMERICA: The nation’s largest servicer offers the HAFA program along with several in-house programs. Its most prominent proprietary program is the “Cooperative Short Sale Program” with an “Enhanced Relocation Assistance” that ranges from $2,500 to $30,000.
Bank of America launched the enhanced program nationwide in May. It applies to preapproved short sales (in which the short sale is initiated without an offer to purchase), and the incentive amount is based on the home value.
Eligible homeowners must start their short sale before the end of 2012 and close by Sept. 26, 2013, to receive the cash payments.
WACHOVIA: Wachovia Mortgage has been providing relocation incentives of $2,500 to $10,000 in a short sale for more than a year. The lender is well-known for its speedy response and no-nonsense negotiations.
CHASE BANK: This lender offers relocation incentives up to $45,000. Not all Chase loans qualify for the incentive — To find out if you have one of these loans, call us today at 951-778-9700.
CITIMORTGAGE: Citi says its average short sale incentive offer is $12,000 in cases where Citi owns the loan. The incentives are based on a variety of factors, including level of distress of the homeowner and loan characteristics.
WELLS FARGO: Wells completed a trial program in Florida last year that offered $10,000 to $20,000 to a homeowner who completes a short sale or deed-in-lieu. The incentive is only available on first trust deeds that Wells itself owns, the lender said.
This is not a comprehensive list, but these are good examples of the programs available to homeowners who are in danger of losing a home to foreclosure.
WILL THE BANK COOPERATE?
Despite what you may have heard, banks prefer short sales over foreclosure or even loan modifications. Why? It’s all about the numbers.
Short sales net banks 12 percent to 25 percent more than they would gain from a foreclosure because of the time and expense to take back, repair, maintain, market and resell a property. And as many as half of loan modifications re-default within the first year, later turning into foreclosures and short sales.
Thus short sales continue to increase, especially in Southern California, as lenders streamline processes and create attractive offers to help distressed homeowners. A short sale allows a homeowner to avoid a financially devastating foreclosure, limit damage to their credit, and re-enter the housing market much more quickly as an able buyer — before home values again shoot through the roof.
More importantly, a short sale allows a homeowner to exit their house on their own terms, with dignity intact.
Want to know if you qualify for any of these programs? Call us today at 951-778-9700and we’ll do the research for you.
Brian Bean and Tim Hardin, owners of Dream Big Real Estate in Riverside, are Default Advocates and ambassadors for Helping A Million Homeowners. They can be reached at 951-778-9700, PE@DreamBigRealEstate.com or at www.DreamBigRealEstate.com and www.ShortSaleAndStay.com.
Labels: Fannie Mae Short Sale, Foreclosure, Freddie Mac Short Sale, Riverside Home For Sale, Riverside Short Sale Agents, Short Sale in Riverside, Short Sales
