Cash for keys programs – where the banks pay money to the homeowners if they walk away from their homes and leave them in good condition – have been common in the foreclosure arena for some time. Now the banks want to apply this principle to the short sale industry. I have been hearing tidbits about this for about a month now, but a weekend article in the San Diego Union Tribune confirms that this is now official.
Major lenders, like Chase, Wells Fargo, Bank of America and others, have apparently begun offering cash to distressed borrowers in order to get them to agree to short sale their homes – up to $35,000 in some cases. Before you get all excited and pick up the phone to call your lender, you need to be aware of how this process works. As with any bank program, the bank controls the process, and you cannot simply call and opt into the program. Apparently the bank reviews distressed situations and contacts the homeowner. The money is paid at the close of escrow of the short sale.
How this system makes sense at all to the banks, who choose the lucky homeowners, is baffling. I find it hard to believe, as I am in the middle of a battle right now with one of these big lenders, just to get them to accept a buyer’s offer on my short sale listing that is perfectly in line with the comparables. But of course, some bank decisions remain and will always remain a big mystery.
My hope is that these lenders are finally realizing that it is up to them to fix the housing crisis, and that they need to get rid of all their distressed inventory to do so. Maybe some angel descended down and landed on the shoulders of the bank CEOs. Ah, but I know better: with the banks, it is all about how much they can make. They must be finally realizing that foreclosure costs them too much money, so giving away a few thousand dollars and blessing more short sales will save them in the long run. Banks don’t do anything because they care about people.
It will be interesting to watch this one, to see how many people actually get “chosen” to be involved with these programs. If you are one, please let me know. I will protect your privacy, but would love to know how the process goes, and whether it is as smooth as the banks say it will be. The proof will be in the pudding, so I am looking forward to seeing how many homeowners are truly helped by this latest lender brainstorm, and truly hope it helps.