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Tuesday, February 07, 2012

Short Sales: $35 Thousand Cash-for-keys

by Calculated Risk on 2/07/2012 08:51:00 AM

Here is a serious incentive to do a short sale ... from Bloomberg: Banks Paying U.S. Homeowners to Avoid Foreclosures(ht Mike in Long Island)

Banks ... are offering as much as $35,000 or more in cash to delinquent homeowners to sell their properties for less than they owe.
Karen Farley hadn’t made a mortgage payment in a year when she got what looked like a form letter from her lender.

“You could sell your home, owe nothing more on your mortgage and get $30,000,” JPMorgan Chase & Co. (JPM) said in the Aug. 17 letter obtained by Bloomberg News.
Farley ... said the New York-based bank agreed to let her sell her San Marcos, California, home for $592,000 -- about $200,000 less than what she owes. The $30,000 will cover moving costs and the rental deposit for her next home. Farley, who is also approved for an additional $3,000 through a federal incentive program, is scheduled to close the deal Feb. 10.
JPMorgan, the biggest U.S. bank, approves about 5,000 short sales a month. It generally offers $10,000 to $35,000 in cash payments at settlement, real estate agents said. Not all of the sales include incentives.
Unfortunately it seems there are still many suspicious short sales. It is common to see a home initially listed as "contingent" or "pending" at a price well below market - meaning the agent or seller already had a buyer lined up. If the banks are paying an incentive for those deals, they are losing twice!