As if avoiding foreclosure were not already reason enough to pursue a short sale, now many homeowners may be eligible to receive an additional financial incentive from the federal government or their lender. There are now two different ways you can qualify to receive an “Incentive” as a result of selling your home through a Short Sale.
The government has created different programs in recent years to stimulate short sales and stem the tide of foreclosures nationwide. Currently, the Home Affordable Foreclosure Alternatives (HAFA) Program provides two options for transitioning out of your mortgage: a short sale or a Deed-in-Lieu of foreclosure. If a homeowner chooses the former option and their realtor is able to find a qualified buyer and negotiate a short sale with the bank, HAFA can potentially provide the homeowner with $3,000 at closing to cover relocation expenses if the application is approved.
If you are planning a short sale, your short sale agency will complete and submit the HAFA application on your behalf. The application is very extensive, requiring information about your financial situation and your intentions regarding the sale of the house, among other details. It is imperative that you cooperate with your short sale realtor and provide any information that is needed for this application if you hope to qualify for the $3,000 relocation assistance.
Many major lenders also are offering financial incentives to encourage homeowners to pursue a short sale rather than let their home go into foreclosure. Banks prefer to avoid a foreclosure situation, because the bank not only takes a sizable loss on the original mortgage loan, but also can incur additional expenses related to the upkeep and sale of the property. In addition, the bank must hold extra funds in reserve until the foreclosed property is sold, meaning it loses the interest it could be earning on that money if it were available to lend.
Financial awards will vary depending on the bank and can be surprisingly substantial. Earlier this month, Chase awarded one of our clients $15,000 as an incentive to do the short sale!! There is no application for financial assistance offered by the bank – your short sale realtor will request it during the initial negotiations. Whether the request will be approved depends on the lender’s policies or criteria, the type of loan (e.g., FHA, conventional, etc.), and your financial situation.
Up until a few years ago, those types of financial incentives for a short sale were rarely offered or rewarded. More recently, however, the tide has turned. The programs are working, and banks and government departments are awarding funds for short sales. How long the money will keep flowing remains uncertain, but if you are already considering a short sale, now is a good time to take advantage of the incentives that are available. If we can be of any assistance, please give us a call.