Two of the biggest national lenders, Chase and Wells Fargo, are finding ways to encourage their homeowners to sell their distressed properties before they go into foreclosure, according to a news story written by Paul Owers of the Sun Sentinel entitled, “Chase, Wells Fargo offer borrowers $10,000-$20,000 for short sale closings,” published June 27, 2011.
Looks like Paul Owers has a big scoop, since the Chase and Wells Fargo websites do not provide detailed information on this new deal – they do provide a lot of information to their customers about short sales and the like. Even though these two big banks are doing these deals, they may have concerns about promoting them to the public. It may be that by offering such a good deal, the banks are worried about a different kind of bank run? Maybe.
What’s the big deal? The bank is giving big cash payments to borrowers that agree to a short sale – and waiving the deficiency.
Both Chase and Wells Fargo, according to the news story, are offering between $10,000 and $20,000 to their borrowers, those borrowers who are having trouble making their mortgage payments, if they short sale their home. (For details on what a short sale entails, read our earlier post.)
This is a big change in tactics from the stance we’ve been seeing by these banks. It was only a few weeks ago that Florida Realtors marched on Washington, demanding federal help in getting banks to move properties and cooperate in short sales.
Key thing here: These two lenders are not only paying significant sums to the homeowners if they will sell that home to a third party in a short sale, the lenders are wiping out any remaining amount due on the note. No deficiency judgment worry here.
Which means, the bank is losing a large some of money on the write off and in forking out the cash, right? My guess is no. They must have put pencil to paper and decided that this is a good deal for them in the long run (cheaper than foreclosure proceedings and then holding those homes on their books and paying for their upkeep).
This is the kind of creative, out of the book thinking that more banks need to adopt – because it is this kind of team effort that can save many Florida homeowners from foreclosure, save our economy, and maybe save some banks from those bulging REO (real estate owned) shadow inventories.
If this deal sounds appealing, then it may be a good time to investigate the opportunity to have your lender make a similar deal. Talk with the lawyer who is negotiating your short sale or fighting your foreclosure defense about a deal like that for you.