Banks, including Wells Fargo and JPMorgan Chase, began offering cash incentives about six months ago to homeowners who agree to do short sales. With foreclosures taking an average of 749 days in Florida, according to a November RealtyTrac report, it’s cheaper to pay off an owner than take them to court.
That is likely because many of the banks can’t prove ownership is pushed to foreclosure. By the way, how much are they paying on average to the homeowner to go the short sale route?
I have heard of people getting $20k - $25k.
Not bad…20K for a 200K property…that they didn’t own.
I guess the 7,500 deed in lieu scam didn’t work well enough. Eventually they will get to principle reduction…after exhausting every other avenue to rip off the homeowners.
There is no shame in strategically defaulting and then accepting an offer to short sale because these banks are paying with money they took by force, without our consent, in the bailouts. In other words, they are paying back their customers with their customer’s own tax money.
Does the homeowner then get at 1099 and pay taxes on the money they received in the process?
Sure is a big risk, though.
Its a great deal. No mortgage or rent for 2 years so you save what $50k? Then the bank gives you $25k to move. Hmmmm. and you wonder why our economy isnt growing fast enough.
Yes the bank will certainly 1099 you and Uncle Sam gets his share
Then you claim insolvency on your taxes and bye bye 1099.
You are overlooking one key fact, a majority of the loans are fraudulent to begin with.
And, the most likely individuals to do a strategic default are the wealthy as they have the common sense to realize that the investment will never recover and therefore, it is better to take the loss.
And the one thing that everyone keeps missing is that these loans were already paid off by the bailout.
If things were to get real nasty, everyone who has a “MERS” loan should file a quiet title action. Then watch the banks move!
That’s true except for those of us who acted a bit more responsibly and actually paid the debt we owed.
Where is my check?
BTW-Strategic default is fine. It happens in business frequently.
The banks are also suing people for the amount lost in the short sale or foreclosure process. I know of one person who was being sued for default in the amount of the difference between the original loan and the home sale amount plus fees and interest.
Short sales have a document that is signed at closing stating that the bank may seek repayment of the full loan amount plus fees and interest. The fees may include remodeling of a damaged house.
A local short sale “specialist” said that if you are short selling, or being foreclosed upon, make sure to file for bankruptcy first to prevent further actions.
That one of the problems. So many of the people defaulting on their mortgage can afford it. Most cant get a modification because their mortgage and taxes dont exceed 31% of their salary.
They may wish to stop providing legal advise unless they are an attorney, which they obviously are not.
It is called a deficiency judgement. When an attorney draws up the short sale contract or reviews it, a good attorney will add a clause that this deal remedies the debt and that no other legal action will be possible.