In default, losing your home to foreclosure and running low on cash?
……your friendly mortgage company may soon be offering you cold hard cash to move.
We have been hearing from Tim and Julie Harris students across the US that banks have become very aggressive with their cash for keys offers….defaulting borrowers are now receiving $10,000…$20,000…$30,000+ to vacate the home. You read that right…someone hasn’t made a payment (potentially for years) yet they are getting a little nice golden parachute as they retire from their lives as squatters…
..oh..and another thing. NO DEFICIENCY JUDGMENTS!
First, a partial article from SFGate.com….next, an email from a HREU Student…
(Note: Agents, think about the ramifications of what you are about to read. Consider how you could use this information to ‘counsel’ potential short sale sellers to list and sell)
It’s the kind of news that seems to defy all logic we’ve ever been taught about financial responsibilities and rights in the real estate world. Now, says the Financial Times, banks are considering paying cash-strapped “homeowners” to vacate foreclosed properties.
Note: SFGate reported this as something that banks are ‘considering’. Fact is, they are already doing it.
According to Times article, the “five biggest US mortgage servicers were told this week at a private meeting with regulators to consider paying delinquent borrowers up to $21,000 each as part of a broader settlement of the foreclosure crisis.”
This proposed program, cutely named “cash for keys,” asks that America’s biggest lenders, (including, possibly, Fannie and Freddie, as well as Bank of America) pay an incentive to get borrowers to leave their homes quickly, and in good condition.
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An estimated 4.8 million Americans are currently 90+ days behind in their mortgage payments, meaning that many homes are about to hit foreclosure. Among this huge number of borrowers, many would, under this program, be eligible for “up to $1,000 to seek independent financial advice and up to $20,000 in cash as a ‘fresh start’ payment towards living costs in a new home.”Free, Easy, Qualified Leads - Without Cold-Calling or Spending $$$ to Buy Them! Register now for the ‘Secrets of the Millionaire Agent’ training event, and get “Think & Grow Rich: Real Estate Edition” and the “Real Estate Treasure Map” absolutely FREE. Learn the high-volume secrets of America’s top-producers! Notice: First 1,000 agents only, so hurry!. Watch Video and Download Free Books Now.
Agents, 4.8 MILLION potential SHORT SALE LISTINGS!
The frustrating thing about this otherwise fairly reasonable plan is that the cash for the keys is American tax payer cash. We already bailed the banks out. Yet only now do we see evidence of that bailout trickling down to the borrowers. Is this program going to help or hurt? Hard to say when nothing like the current climate for home prices has ever been seen before in this country.
Here is an email from a HREU Student:
I have just discovered a program that I believe represents a significant marketing opportunity for those of you looking to increase your short sale volume.
Currently Chase is doing a Short Sale Outreach program where they are mailing out a letter to home owners who are in default, incentivizing them to participate in a short sale. I was very skeptical at first, but have now received a letter that was sent to a client, and after seeing it in writing I am still shocked.I called a negotiator I have been working with on another file to discuss this program, He indicated that he has closed 5 files recently under this program already.
The incentive Chase is offering is unreal, $10,000, $20,000 and $35,000 cash for any use, based on loan amounts, and not sales price. THIS INCLUDES A SETTLEMENT IN FULL!
The file I have the letter for has a $500,000 loan amount and they are offering the seller $35,000 (I am still in AWE) to close a short sale prior to foreclosure. The details of how to get into this program are slightly blurry but I believe that it must be a Chase owned loan (portfolio – not Fannie, Freddie, FHA, VA) and I believe that they have created this program for sellers who have failed to modify their loan, in an attempt to prevent these properties from becoming REO’s.
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The negotiator I discussed this program with has been very good to me, the file he just approved for me in under 4 weeks had a BPO value of $114,000 and the purchase price was $80,000, the BPO was clearly bad, however due to the fact that there is no investor to submit to or lodge value challenges with, I was able to challenge the value with him over the telephone, and he agreed with everything I said and approved the sale without counteroffer and even gave $5000 to the second.
This means that we have a program that is available to sellers, with SIGNIFICANT incentive, that can be approved very quickly, and the funds for this program come directly out of the proceeds from the sale.
The negotiator recalled a recent closing in this program where he had a BPO for $16,000 and an offer for $12,000. They approved the offer, gave the seller $10,000 at closing, and Chase netted approximately $1,000 from the sale, obviously we will not be seeing any sales at this low price anywhere in our area, however it demonstrates how motivated chase is to keep REO’s off their books.
I would recommend finding sellers with Chase (or originally written by WAMU) loans and having them call Chase and see if they qualify for this program. We still want to carefully manage this process, and I have some significant insight into how to get these successfully closed without getting a preapproved price that we are stuck with similar to HAFA short sales
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