Short sales are gaining popularity among both delinquent homeowners and lenders as an alternative to foreclosure. While not everyone is happy to participate in the process, most have come to the realization that losing a home to short sale is minimally damaging compared to a short sale. However, most homeowners shy away from the process knowing all the effort and risk involved. In order to encourage more homeowners into short sales, some lenders are now offering incentives.
Cash Is King
Banks are beginning to jump at the chance to minimize their losses and recoup their loans by offering homeowners cash-back incentives for pursuing a short sale over other foreclosure solutions. Those who don’t qualify for a loan modification or refinancing option may be tempted to just let the house enter foreclosure, but the banks aren’t always ready for that.
A new pilot program is being implemented by Bank of America to Florida homeowners facing foreclosure, testing whether these cash incentives are effective in securing more short sales. Homeowners may be eligible to receive anywhere between $5,000 and $20,000 in relocation expenses in exchange for successfully completing a short sale. So far about 3,000 homeowners have expressed interest in participating in the incentive program, a small drop in the bucket compared to how many are actually facing foreclosure. WellsFargo and JP Morgan Chase have also expressed interest in beginning to offer cash incentives to delinquent borrowers.