Austin Texas – Some lenders have been offering huge cash incentives to homeowners at risk of foreclosure to “Short Sale” their home (versus being foreclosed on). For example, Chase has been very quietly offering as much as $35,000 cash at closing to homeowners to short sell.

These homeowners are “upside down” on their loans — meaning, in general, they owe more than the home is currently worth. With a “short sale” (also called a “short pay”), the lender is willing to accept less than the full amount due from the borrower.
These cash incentive programs were started by lenders after they saw the U.S. Treasury start a cash incentive program in 2009, also known as HAFA (Home Affordable Foreclosure Alternatives). The HAFA program provides approximately $3,000 to the borrower upon the successful completion of a short sale. In general, to qualify for the $3,000 HAFA cash, your loan needs to be owned by Fannie Mae or Freddie Mac (and over 80% of the loans in the U.S. are currently owned by Fannie or Freddie).

The lender cash incentives began last year and are available nationally (ie in all areas of the U.S.). Why would a lender want to pay such large cash incentives to a homeowner who hasn’t been making their mortgage payments? The short answer is that short sales generally wrap up the transaction for the lender much more quickly than the lender foreclosing on the borrower, and it also leaves the home in better shape for resale so the lender normally gets more money for the house with a short sale (since the homeowner continues to live in the house until the short sale is complete). A short sale generally produces a better and faster result for the homeowner, the lender, and the community, than a foreclosure. Chase has completed more than 140,000 shorts sales since the start of 2009. And these cash incentive programs seem to be expanding and increasing system wide. Wells Fargo is now offering cash incentives for short sales and “deed in lieu of foreclosure” transactions in many markets. Citi recently confirmed through the media that its average incentive offer is currently $12,000 for borrowers in cases where Citi owns the loan. Bank of America is not offering any cash yet, but says it is committed to improving the short sale process and has made procedural changes to cut some of the red tape for agents working with the bank on pre-foreclosure sales.

These lender cash incentive payments normally only apply to first-lien loans that the lender holds for its own portfolio (rather than loans it merely services for others like Fannie Mae and Freddie Mac). However the Fannie and Freddie owned loans would likely qualify for the $3,000 HAFA cash incentive mentioned above. The lender cash incentive amount varies, based on many factors like the loan balance and appraised value of the home. If you have an FHA loan (or another government guaranteed loan like USDA or VA), you could qualify for up to a $2,000 cash incentive if you successfully short sale your home versus allowing your home to go to foreclosure.

The cash incentives being paid by Lenders, the U.S. Treasury (HAFA), and FHA (HUD) to Short Sale your home (versus be foreclosed on), can be used by the borrower to cover expenses, like moving and relocation costs (or to just get back on your feet). In brief, the “Short Sale” allows the homeowner to avoid foreclosure, minimize their financial damage, and move on from a burdensome, unaffordable mortgage, and most of time owe nothing to the lender after the short sale is completed. And in many cases, a short sale allows the borrower to qualify for a new mortgage in just 24 months as opposed to 5 to 10 years after a foreclosure.

It doesn’t appear likely that the need for short sales will end anytime soon. Most economists and experts are forecasting another price drop in the U.S. of about 3 percent 2012.

Thinking about a short sale?

I can help you short sale your property and get back on your feet. Send me an e-mail at GeorgeKiefer@gmail.com. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (512) 970-0709

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Austin loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.

Thanks for reading this, George Kiefer, GRI, CDPE.
George is a Real Estate Agent and Broker Associate at Keller Williams Realty in Austin, Texas. Austin Short Sales Realtor:
Phone: (512) 970-0709. GeorgeKiefer@gmail.com.
Assisting Homeowners in Distress

View My homes for sale at www.GeorgeKieferAustin.com.
George Kiefer specializes in loan modification assistance and short sales in Austin Texas. Austin Loan Modification Help, Austin Short Sales. Austin Short Sale Realtor Austin Texas Short Sales. Austin Realtor.

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Important Notice
George Kiefer, Keller Williams Realty, and the Stop Foreclosure Institute are not affiliated in any way, shape, or form with the government. Our services have not been reviewed or endorse by the government or your lender. Most lenders willingly work with agents on short sales. Why?
Because most short sales are beneficial to a lender. If you accept our offer to help you on a short sale, your lender may not agree to a short sale or to modify your loan. We do offer a loan modification kit.
However, the likelihood of negotiating a modification is like everything else in life. It takes work and persistence to convince your lender to modify your loan. No matter what you or we do, your lender may not approve a loan modification.
We do not recommend that you stop paying your mortgage, because this will cause damage to your credit and could cause you to lose your home. Because we know avoiding foreclosure is so important to any homeowner, we recommend that you speak with the appropriate legal or tax advisor before making any decision.
This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing.
You have the option to reject a short sale or loan modification from your lender if it does not meet your approval. If you decide not to go thru with the short sale, then you do not have to pay us our fee. We normally make a real estate sales commission for helping you on a short sale.
The views expressed here are George’s personal views and do not reflect the views of Keller Williams Realty.
This information on Austin Short Sale Question About Deficiencies is provided as a courtesy to our viewers to help them make informed decisions.