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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsBanks paying the seller a Bonus on short sales (Mortgage)
Banks, accelerating efforts to move troubled mortgages off their books, are offering as much as $35,000 or more in cash to delinquent homeowners to sell their properties for less than they owe. Lenders have routinely delayed or blocked such transactions, known as short sales, in which they accept less from a buyer than the sellers outstanding loan. Now banks have decided the deals are faster and less costly than foreclosures, which have slowed in response to regulatory probes of abusive practices. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing large cash incentives, said Bill Fricke, senior credit officer for Moodys Investors Service in New York.
Losses for lenders are about 15 percent lower on the sales than on foreclosures, which can take years to complete while taxes and legal, maintenance and other costs accumulate, according to Moodys. The deals accounted for 33 percent of financially distressed transactions in November, up from 24 percent a year earlier, said CoreLogic Inc., a Santa Ana, California-based real estate information company.
Farley, whose home construction lending business dried up after the housing crash, said the New York-based bank agreed to let her sell her San Marcos, California, home for $592,000 -- about $200,000 less than what she owes. The $30,000 will cover moving costs and the rental deposit for her next home. Farley, who is also approved for an additional $3,000 through a federal incentive program, is scheduled to close the deal Feb. 10. I wondered, why would they offer me something, and why wouldnt they just give me the boot? Farley, 65, said in a telephone interview. Instead, Im getting money.
A mountain of pending repossessions is holding back a recovery in the housing market, where prices have fallen for six straight years, and damping economic growth. Owners of more than 14 million homes are in foreclosure, behind on their mortgages or owe more than their properties are worth, said RealtyTrac Inc., a property-data company in Irvine, California.
More at link:
http://www.bloomberg.com/news/2012-02-07/banks-paying-homeowners-a-bonus-to-avoid-foreclosures-mortgages.html
Interesting!!
DURHAM D
(32,610 posts)Finally near the end the real reason was revealed - "Evan Berlin, managing partner of Berlin Patten, a real estate law firm in Sarasota, Florida, said representatives of a large bank told him the incentives are primarily given to borrowers when it doesnt have the proper paperwork needed to win its foreclosure case. He declined to name the bank for publication."
dreamnightwind
(4,775 posts)I haven't read the full article yet, but your post added to the OP, makes more sense now.
pinboy3niner
(53,339 posts)Occupy activists have been defending families from foreclosure and shutting down foreclosure auctions.
Bankers certainly are not relenting out of the goodness of their hearts, lol.
Check out this news from Occupy L.A.:
Occupy LA announces meeting with Wells Fargo Bank over home foreclosures (at BANK's request!)
http://www.democraticunderground.com/1002276193
Goodness of their hearts, my ass!
joshcryer
(62,276 posts)JNelson6563
(28,151 posts)But like many, I question everything these greedy bastards do.
Julie