Two of the nation’s biggest lenders are giving away cash rewards to struggling Florida homeowners who agree to stave off foreclosure by doing a short sale instead, according to reports in the Florida Sun-Sentinel.
Wells Fargo and JP Morgan Chase haven’t made any official announcements about the initiative, but indebted homeowners have reported that the two companies have offered them cash incentives of anything between $10,000 and $20,000 to sway them into opting for a short sale.
As part of plans to assist homeowners who want to avoid a foreclosure, the banks are already operating what has been termed a “cash for keys” program, whereby homeowners can get money in return for agreeing to give up their homes. However, the reported short sale incentives would appear to be something new, say industry observers. Previously, short sale transactions have always been seen as the bank doing a favor to the struggling homeowner, according to the experts.
Intriguingly though, not all homeowners have been offered short sale incentives, and banks won’t let on why certain people are being excluded – they reveal no criteria, other than to say that such incentives are determined on a case-by-case basis.
Experts say that the new short sale incentives are the most practical method for both banks and homeowners to get out of a sticky situation – the homeowners avoid foreclosure, while the banks get to write off bad loans, avoiding the need to foreclose, which can be a lengthy process, averaging 619 days according to the latest figures from RealtyTrac Inc.
According to Wells Fargo, the short sale incentives have been offered in states “Where the process of foreclosure appears to be lengthening,” says their spokesperson Tom Goyda.