Behind on a Mortgage? Your Lender Might Want to Pay You!
The big banks have come to the conclusion that more foreclosures will not help the sluggishly recovering housing market. It’s about time. A good alternative to foreclosure or bankruptcy for underwater homeowners – those who owe more on their mortgage than their home is worth – is a short sale. In the beginning of the housing crisis, the process of doing a successful short sale was painful, took months, and often resulted in the bank saying, simply, “no.” The process turned off many homeowners who quickly moved on to other, more drastic, alternatives, like simply walking away from the home or riding out the foreclosure.
But times have changed. Now, in a complete turnaround the banks are not only processing short sales more quickly, and timely responding to requests for approval, but are actually offering relocation allowances to homeowners to assist them in their move out of the home. Some programs give homeowners up to $30,000, but these are typically in the foreclosure clogged states like Florida. And the allowances are still subject to bank approval, so not every sale will grant the allowance.
Still, the trend marks a good sign for underwater homeowners facing the prospect of foreclosure or bankruptcy. Years into the crisis and the lending banks are finally realizing that short selling is the lesser of several bad options. The bank never takes title to the property, its quicker than a foreclosure or a bankruptcy, and short-selling homeowners are much more likely to maintain the property during the marketing period. Moreover, with tightened underwriting standards on new loans, economists like short-selling because the home is “transferred” into the name of a credit-worthy owner who is ready to make timely payments, maintain the property, and contribute to condo or home owner association dues.
Thinking of short-selling? Be sure to get a team of experts in place. An experienced lawyer who has a good track record of success, like the writer here, is imperative to getting your short sale approved. And selecting a broker who knows how to market a short-sale is equally important, as the dynamics are different in a short-sale and must be considered in the marketing plan.