There are 1,325,334 foreclosed homes on RealtyTrac right now, and through December 2011, one in every 634 housing units received a foreclosure filing. Though some banks have only added to their foreclosure proceedings – and as we wrote yesterday, there could be even more, in the wake of the mortgage settlement – some banks are taking drastic measures to ensure that they do not follow suit.
According to a CNNMoney article, banks have begun paying off struggling homeowners to short sell their properties, with some offering as much as $35,000.
“The deals are aimed at incentivizing homeowners who owe more on their home than it is worth and who are seriously delinquent on their payments to sell their homes in a short sale,” the article states.
Elizabeth Weintraub, a Sacramento-area real estate agent who specializes in short sales, said the unorthodox strategy is surprising homeowners.
“Initially, the homeowners are skeptical,” Weintraub said. “The bank may have already turned down their request for a modification. Then, one day, they call and say, ‘Let us give you some cash.'”
Tom Kelly, a spokesman for Chase Mortgage, told CNNMoney that the strategy makes sense from the bank’s point of view.
“The first choice is a modification, but if that’s impossible, than a short sale is a faster, more efficient solution,” Kelly said.
CNNMoney also reported that different banks have attempted different twists on the buyout formula. Wells Fargo, for instance, has limited its buyout offers to specific states, where it has paid $10,000 to $20,000 to homeowners to either short sell their property or transfer the home’s title to Wells Fargo. Bank of America recently tried a pilot program in Florida where it paid incentives of $5,000 to $20,000 for sales initiated between Sept. 26 and Nov. 30, 2011 and closed by the end of August 2012.