Get Paid to Move Out of Your Home?
In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave?
The new plan is called HAFA (Home Affordable Foreclosure Alternative) created to assist the more than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped a few of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.
Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”
Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale.
- Lenders taking a long time to accept
- Not accepting short sale offers
- Forgiving deficiency (Currently provide 1099) they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.
- Pulls down the value of neighboring homes
- Banks that own these loans are in a position to block any sale unless they get a piece of the deal.
- Streamline the process
- The government intends to pay all parties as an incentive
- Prospect of getting more money with a sale than with a foreclosure.
- Suffering less damage to credit ratings. And as part of the transaction,
- For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks.
- A lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it.