Bank offers homeowners cash to sell
Pilot short-sale program in Florida is aimed at underwater homeowners who could face foreclosure. Other lenders also are offering certain homeowners money to move.
Bank of America is trying a new approach with underwater homeowners in Florida: It is offering them money to dispose of their homes in a short sale.
It offered payments ranging from $5,000 to $20,000 to homeowners who agreed to sell, and got positive responses from about 15% of the 20,000 customers to whom it offered the deal.
The program was aimed at homeowners who cannot afford their mortgages, so not all qualified. The amount of the incentive program was based on the size of the mortgage, as well as other factors, according to an article in The Tampa (Fla.) Bay Times.
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Apparently, the homeowner doesn't find out how much the incentive payment will be until after the sale contract has been signed. The payment is made when the sale is closed.
"The bank is not putting in writing how much homeowners will get until the end," Steve Capen, a short-sale specialist with Keller Williams Realty, told the newspaper. "By that time, homeowners have entered into a contract to sell. We're going to have issues. Customers are going to be upset."
About 3,000 BofA customers agreed to participate in the program before the deadline passed last month. The bank has said it would consider offering the program in other states.
Bank of America is not the only lender to offer homeowners financial incentives to sell homes the lenders think are headed for foreclosure. Florida was a logical place to launch a pilot program. Not only are a high percentage of homeowners underwater, but foreclosures take almost two years to complete.
Wells Fargo offers payments of $10,000 to $20,000 to certain homeowners who agree to a short sale or a deed in lieu of foreclosure. JPMorgan Chase also has offered some short-sale incentives of up to $20,000, and Citibank says it offers payments averaging $12,000 on mortgages it owns. (The Orlando Sentinel has more details.)
The federal government's Home Affordable Foreclosure Alternatives program offers homeowners up to $3,000 in relocation assistance.
The lenders are calculating that the incentive payments are less than they would spend on foreclosure, especially in states such as Florida where foreclosure is a judicial process that has been slowed even more by the repercussions of the robo-signing scandal and problems with law firms hired by the lenders to bring foreclosures.
"The banks have realized, 'We are losing more on the foreclosures than the shorts,'" Matt Augustyniak, president of Horizon Realty in Bradenton, Fla., told The Herald-Tribune of Sarasota. "And they are even willing to compensate the sellers, to give the sellers money to vacate the property."
My mother and I went through the Home Modification Loan program, they only modified the payment and not the loan. Bank of America went down on our payment by $391.60.
The Home Modification Loan program is a rip off, they tell you it is a fixed loan, however it is not a fixed loan and it does not modify your loan.
The sooner people realize the difference between GOOD debt that is to be paid back by borrowers and fraudlent debt the better off we as a people will ultimately be ...
This is not a simple economic equation and is not as simple as talking about borrowing and inflation.
This is a result of a bubble created in the real estate market, which was then intentionally crashed. Bad bets, hedged bets ... the banks want people with an ethical and moral code to continue to pay on a contract they themselves did not honor. If you don't pay -- they get paid by the government ...and then they can turn around and sell the home and get paid again in settlement. There is no statute of limitations -- so, they can come after the borrower years down the road when the trail of paperwork is clean and tidy for the difference in the price they received on the home (in the reduced market they created) and the amount you owed.
So, they were paid on your initial settlement. Paid by frannie and/or freddie on foreclosure. Paid on the resale of your home. Potentially paid a difference by you later. All the while, paid on bad bets they took on loans they knew were bad.
FRAUD IS DIFFERENT THAN DEBT. We have borrowed for years. And we've paid those loans back ...when loan terms were ethical and homes were an asset. Wake up folks, that game changed.
I own a townhome that I could MORE THAN AFFORD. I tried over the course of several years to refi my home -- for a lower rate. I am a good and responsible consumer who pays her bills. On time. I could not refi -- unless I came to the table with the differenc e in home value. Why? The value is SO completely subjective -- it's almost not REAL.
So, I called again when the programs came out -- especially since I was so "upside" down on the mortgage that I could AFFORD. There has never been a program I qualified for b/c the value of my home dropped.
I get married - move out - get tenants. The rent covers a bit of my mortgage and I shell out the difference each month. On time. I call about the new HARP -- Bank of America tells me YES -- you qualify! Call back early December to put in your application.
November 28 -- the letter arrives telling me Greentree now has my loan. I call Greentree -- they are NOT LICENSED in my state to do anything under that program. The woman on the phone tells me she's sorry. There is nothing she can do and she TOTALLY understands.
I cry - tell the woman on the phone that my heart is broken over this country I served for 6 years. The United CORPORATIONS of America.
Funny, the right wing feels "programs" are handouts. However, they fully support financial institution bail outs. I don't see those institutions bailing us out in return by righting the wrongs in our environment.
I am no longer a good consumer. Just today I decided to STOP PAYING ... and Bank of America OWNS Greentree Lending. Convenient, eh?
What makes me mad is . We the taxpayers bailed out the banks , thanks to Obama . They are supposed to be helping us , but instead. They are holding onto the money . They should use it to help homeowners to stay in their homes or Give back the money with interest.
They loose money when the house is vacant. Like most said, vandals , plus the deterioration . Then they have the up-keep. Mow the yards, keep pools clean etc. etc. or they get hit with Code Enforcement fines . That has to be taken care of ( fines ) when the house finally gets Sold .
My son a Minister lost his job ( due to the economy) . When he got the job and things were up ( 3 yrs. ago , If I remember right ),He bought a 1800+ sq. ft. mobile home on 1 1/2 acres here in Florida. When he bought prices were up .Paid $150,00 He is now under water . It appraises now for $73,000 .The Bank will let him sell the house for $73,000 ... But , it can't be a family member.
Why can't the Bank just let him and his family ( 4 kids) have a New Mortgage for the $73,000 he can sell it for , he would Not have to move his family . He could afford the mtg. payment. Wife works and he is looking for new job . It makes more sense to me to do that , than spend tons of money going thru a foreclosure , up-keep etc. He has 3 mths. to sell it , if he doesn't sell it . Has to give title over to the bank and they are out on the streets.
Because of this , now he is planning on moving to Africa( entire family ) to do Missionary work . Doesn't plan on coming back. If this happens . I will never see them again , I don't want to loose my family. We can't help them because of husbands work.
My Husbands job ...hasn't had a raise in 5 yrs., pulled their take home vehicles ( drives 90 miles round trip to and from work , plus tolls). Plus, our health insurance went to a $6,000 / $12,000 deductible . Our meds cost us a $1000 a month , so you know where our savings went. If , we have an emergency...we might be out of our home . It would have been paid off. But, had to do an addition that is handi-cap accessible because of my health . it cost more than expected. Maybe it would have been easier on hubby if I died. ;(
....I can't get SS disability , because I did volunteer work. Even tho I have paid into to SS , it's NOT in the right time frame, from when I became disabled.
We have no bills we can do without. My car is 12 yrs old. paid for , husbands car is 9 yrs. old and paid for. We have Never had a vacation . We have always paid bills first. Nothing Luxury here.
I guess our wonderful government wants us to just curl up and die.
I keep telling everyone , If our Government was run like a business . 90% of them would have been fired already. We have Way to much Government . Cut 1/2 and look how much we could save .
I'm like some of you posting here . What are we supposed to do and where are we supposed to go ?
Thanks for letting me vent . I needed it.
yeah, right! I had to short sell my house, and now I get a letter from Freddie Mac telling me I have to pay taxes on the difference between what I owed and what they sold the house for. What is that??? I pay taxes on money I never saw and the mortgage company gets to write it off as a bad debt? Where is the fairness in that? How am I going to pay taxes on $60,000? If I could afford that, I wouldn't have had to short sell in the first place.
I have been trying this process with BAK since May, 4 appraisals, a really good offer in our small rural town, slipped thru 3 times for them not getting done in 90 days, 1 appraisal that was totally unbelievalbe for this area, if short sale accomplished was to get $3,000---A person can't seem to talk to anyone or get answers, even tho I was supposed to be set up with just 2 people, my calls aren't returned, so I wouldn't believe this is working or will work with them.
just another appraisal again yesterday because offer again, I think, the realtor is totally fed up trying to deal with BAK too----sheriff's sale set for a couple months from now---BAK even admitted once to the realtor that they have let us slip thru the cracks----been trying to deal with this bank for 3 years and BAK kept none of the promises.
Most may not remember but, B of A had trouble before with predatory lending of sub prime, and secondary loans . Class action suit. early 2000' they sold off all those assets to Fairbanks capital and moved on to the next wave.
Most of the people who you speak to on the phone at these banks , start in customer service and get bounced around to these departments with no experience in mortgages, finance etc. they have tons of files on there desks so if it is easier to pass them along to another department such as foreclosure, loss mitigation, bankruptcy etc they will do it.
As for the big one AIG , they sold off their mortgage portfolio , AG finance and morequity , put their people out of work and now the homeowner 's are dealing with a new bank and servicer
WOW! Your kidding me, really?? That is just freakin evil and reminds of the early days when people were getting kicked out of their homes and off their land in the name of progress. I am not that old, but I remember it from school. Seems to me rather than the bank kicking someone out of their house helping people stay in their house would be more approporiate. The banks don't want the property. Empty houses = the potential for high crime areas and other urban problems. Shame on the banks!
Sounds to me like too many people posting here have bad memories. The bank bailout was passed by Congress while BUSH was President, and he signed it. This bank bailout was not Obama's doing. Facts, people. They're cool.
The more you know....
Agree with all the horrible stories below on BOA. If the banks really want to help, then don't put the home into foreclosure. REALLY work with the homeowner, and understand the impact it has on individuals lives, not on some corporations bank account. I bet that there are bonus assigned to those who do foreclose and yes, the mortgage corp doesn't care cause they will get their $.
BOA foreclosed on me on 12/9/09 - and railroaded us out before Christmas. Let that make it's way up to someone that made that decision and having to tell your kid her room and home are gone.
Sure hope a class action lawsuit takes place as people are losing their livelihood due to other corporations also wanting to save $.
Save people, not $
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.