As part of its efforts to reduce the number of foreclosures on its books, the Bank of America is offering relocation payments of up to $30,000 to struggling homeowners to induce them to agree to a short sale.
In recent months, major banks in the US have become increasingly willing to embrace short sales as a cheaper alternative to foreclosure, as the latter is now far more expensive and time consuming to process, reported CNN Money.
Short sales allow the banks to reclaim possession of properties far more quickly than the foreclosure process, and as a result these homes are often in a much better condition for resale. In addition, studies have shown that short sales tend to recoup more money than foreclosures.
Because of this, banks have hit on the idea of financial incentives to induce homeowners who can’t pay their mortgages to agree to a short sale. Bank of America began a pilot scheme last year in Florida, paying out up to $20,000 in some cases. JP Morgan Chase quickly followed suit, launching a program that offered cash incentives of up to $35,000 for homeowners to agree to short sell their properties.
Following the success of the pilot scheme, Bank of America are now introducing their short sale incentive program nationwide. In order to qualify, homeowners need to get the sales price of their home pre-approved, and the sale must be completed by September 26 next year.
Bob Hora, an executive with Bank of America, said in a press release that “Bank of America is committed to providing alternatives to foreclosure whenever possible.”
“This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home.”