Two years ago the Obama administration sought to stimulate the housing market by offering certain homebuyers an $8,000 tax credit. Now some banks are coming up with their own incentives to encourage sales with cash offers to eligible sellers rather than buyers.
With a huge inventory of foreclosed homes, banks, which have been under investigation for their practices, are trying to avoid further foreclosures through the use of short sales in which properties are sold for less than is owed on the mortgages. Last November, 9 percent of single-family home sales were short sales, up from less than 7 percent in November 2010. Upfront cash helps make t he deal.
JPMorgan Chase will give cash-strapped homeowners up to $35,000 with Wells Fargo offering incentives ranging from $3,000 to $20,000, if homeowners agree to a short sale to avoid lengthy and costly foreclosure, USA Today reported.
“When a loan modification isn’t possible a short sale may be a better and faster solution,” JPMorgan spokesman Thomas Kelly said.
Bank of America is testing a program in Florida with incentives ranging from $5,000 to $25,000 before deciding whether to go national. In Florida, half of the mortgages in foreclosure are more than two years past due.
Not all borrowers are being offered incentives, which are being determined on a case-by-case basis. However, it is another means of clearing the backlog that will be necessary to revive the national housing market.
The Watertown (N.Y.) Daily Times (Feb. 22)