Wednesday, May 23, 2012

And it took them how long?

"Banks discover the utility of short salesBanks have stepped up the use of short sales over the past year, partly because of incentives from Freddie Mac, but mostly because of the increased efficiency and cost savings. Foreclosure proceedings are long and grueling and can cost banks upwards of $60,000 for each property it processes. Although short sales can complicate sales by requiring the bank, borrower, and buyer to come to an agreement on price, banks are finding that accepting less than the homeowner owes is preferable to foreclosure. They like the method so much, in fact, that some of the largest banks are offering incentives to troubled mortgage holders to enlist their participation.

Bank of America (NYS: BAC) , whose exposure to bad loans intensified when it acquired Countrywide Financial in 2008, began offering incentives last year of up to $30,000 in relocation expenses to homeowners who qualified and signed on for the program. JPMorgan Chase (NYS: JPM) also started offering borrowers amounts as high as $35,000 last year, acknowledging that short sales are a quicker solution than the foreclosure process. Wells Fargo (NYS: WFC) jumped in last year as well, though its incentives are lower than what the other two banks offer -- between $3,000 and $20,000."--article by

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