Short sales are a big part of our real estate reality, and they are not going anywhere anytime soon. Although the relief of getting out of a mortgage that can no longer be maintained is usually a blessing for sellers, there is also an added benefit in some cases, of getting a check from the bank at closing.
There are several current programs that offer to pay sellers at the close of escrow on a short sale:
HAFA. The Home Affordable Foreclosure Alternatives program (HAFA) gives qualified sellers up to $3000 at closing. This program applies to both short sales and deeds in lieu of foreclosure. Click here for more information on HAFA and to see the requirements.
Transition Assistance Program (TAP). This is a Calfornia program that nets qualified state homeowners up to $5000 at completion of a short sale or deed in lieu of foreclosure. Click here to check eligibility and get information.
Bank of America Cooperative Short Sale Program. This program is available to any B of A loan holders who are doing a short sale, and provides up to $2500 to those who qualify. The difference between this program and HAFA is that B of A preapproves the home for short sale, including the list price (which could be an issue). A 4 month time frame is given in which the agent must sell the home, and at the end of that time if the home has not sold B of A will issue an automatic deed in lieu of foreclosure (which could be a problem). Speak with your agent if you are not sure about how this program compares to HAFA, as the market time restrictions could be an issue. Contact B of A to get more information on the program.
Chase and Citi Short Sale Programs. Both of these lenders have initiated aggressive programs that pay up to $20,000-35,000. But don’t get too excited just yet…in order to partake of this program you need to receive a letter from one of these banks. This program is not owner-initiated. The banks find those homeowners whom they feel meet standards to successfully qualify. I know of one case here in La Jolla where a homeowner did receive such a letter.
Other bank programs. Some other banks are jumping on the bandwagon and offering their own short sale versions. Wachovia Bank sends letters to sellers asking them to participate in short sales, with a financial incentive at closing (between $3000-5000). Other banks have their own programs and more are sure to follow.
Many lenders are creating their own programs to bypass the HAFA program, as it limits the liability of the banks to collect money. With their own programs, controlling many of the terms of the short sale (like price and time frames), but if you are going to use any bank programs you need to understand these programs. Your agent needs to explain the differences between the bank program and HAFA, so that you can make an informed decision as to which one to choose. As I always say, knowledge is power.