Posts Tagged Foreclosure
Bank of America is offering some struggling homeowners payments of up to $30,000 if they sell their homes in a short sale and avoid ending up in foreclosure.
Under the plan, Bank of America (BAC, Fortune 500) will offer homeowners so-called relocation payments of between $2,500 and $30,000 if they sell their home in a short sale. In short sale deals, the sale price of the home is less than what the seller owes the bank.
The bank first tested the payments in a pilot program in Florida last fall. Under that initiative, Bank of America paid up to $20,000 to borrowers who sold their homes in short sales.
“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,” said Bob Hora, an executive for the bank.
Chase (JPM, Fortune 500) started a similar initiative in late 2010 that pays as much as $35,000 to short sellers. Wells Fargo (WFC, Fortune 500) has also paid five-figure incentives to short sellers or to owners who turned over their deeds to the bank.
BofA said it has completed 200,000 short sales over the past two years. These sales are generally more cost effective for banks than foreclosures. By avoiding foreclosure, the lenders get distressed properties back from delinquent borrowers more quickly, which helps them to avoid property tax payments, maintenance expenses and legal fees that can build up for months, even years, as foreclosures work through the system.
I came across this article in Mortgage News Daily today and thought I’d share. I’ve felt much the same and have even had people contact me recently about feeling like they are renting their home and why shouldn’t they walk away from it and rent someplace for less month per month because they can’t refinance to a lower rate and payment. Refinancing those most at risk, yet current on their mortgage, would be a quick way to ensure that people are not walking away from their homes.
Salt Lake City, UT
While walking this morning I noticed the house two doors down had a notice on the door: This home is owned by Fannie Mae.
I know, it’s all over these days. I’m sure many of you have had a neighbor lose their home recently, also. It’s sad. He and his family have lived there since 2004. This house is very cute and was cared for and loved by my neighbor. It was built in 1938 and has been thoroughly remodeled and the landscaping updated.
Like so many others though, he’s not losing his home because he bought more house than he could afford – living there for seven years is a testament to that – but because due to the economy he is earning much less than he even last year and he can no longer afford to pay his bills.
And he’s not becoming a renter. He, his wife and kids are all moving-in with other family and sharing expenses.
I guess I’m from a different school of thought about this recession. I am not from the school of “real estate and mortgage fraud brought down the country”. I’m from the school of thought of “Yeah, there was some fraud in the real estate industry, but the biggest cause of the bubble burst was the economy already being on a downward spiral causing loss of jobs which lead to people losing their homes and cars and other things.”
I feel my position is supported by the fact that it wasn’t only the mortgage industry that saw late payments and defaults. All sectors of the credit industry did: homes, autos, credit cards, etc.
Why did this happen? Well I’m no economist, but I can guarantee that the people really responsible for the mess we’re in have shifted the blame to those without the money and the microphone and are walking away scott-free and richer than they were in 2007.