Incentive Payments for Short Sales?? – Reprint from Lowell Sun 3/10/12

Saturday’s Lowell Sun article (www.lowellsun.com) by Attorney James Haroutunian tells us about possible changes on how the banks handle short sales and their clients.

Incentive payments becoming part of some short-sale deals

 

Last week I discovered the holy grail in the world of short sales: My office performed a short-sale closing where the lender paid a $20,000 incentive payment to the seller. That’s right, the seller got out from her loan and got paid for it at the same time.

Industry rumors rang in the new year, as lenders indicated 2012 would be a big year for short sales. High foreclosure volume in hard-hit states such as Florida motivate lenders to use the collaborative process as an alternative to legal action. Some lenders claimed to begin using incentive payments in 2011, though infrequently.

Last week, I bore witness to this phenomenon, as a very happy seller walked away from her mortgage with $20,000 cash. The lender further agreed to waive any deficiency obligation by the seller.

Will this become the norm with short sales? Local real-estate agents are hopeful incentive payments will continue because they will help clear housing inventory. But they remain skeptical it will actually happen.

USA Today reports the following major lenders providing certain programs:

* JPMorgan Chase went national with short-sale incentive offers last year, paying up to $35,000 in some cases.

* Bank of America is testing incentives from $5,000 to $25,000 in Florida to see if it should be expanded to more states.

* Wells Fargo’s incentive offers range from less than $3,000 to $20,000, according to a company spokesman.

James Haroutunian Law Office at 630 Boston Road, Billerica, 978-671-0711 or email at james@hlawoffice.com.

 

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