From Bloomberg with respect to a move by major lenders to incentivize delinquent homeowners to short-sell their properties rather than occupy mortgage free for years by offering the debtors up to $35,000 in cash to move on:
Lenders have routinely delayed or blocked such transactions, known as short sales, in which they accept less from a buyer than the seller’s outstanding loan. Now banks have decided the deals are faster and less costly than foreclosures, which have slowed in response to regulatory probes of abusive practices. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing large cash incentives, said Bill Fricke, senior credit officer for Moody’s Investors Service in New York.
Losses for lenders are about 15 percent lower on the sales than on foreclosures, which can take years to complete while taxes and legal, maintenance and other costs accumulate, according to Moody’s. The deals accounted for 33 percent of financially distressed transactions in November, up from 24 percent a year earlier, said CoreLogic Inc., a Santa Ana, California-based real estate information company.
In San Francisco where $35,000 can represent less than six months of mortgage free living, fifty-five percent of distressed listings (which account for eighteen percent of all listings) are currently short sales, versus seventy-one percent at the same time last year.
∙ Banks Pay Homeowners to Avoid Foreclosures [Bloomberg]
∙ Five Years Of “Free” Foreclosure Living At 333 First Nears An End [SocketSite]
∙ Going On Four Years Of “Free” Foreclosure Living Over In Noe Valley [SocketSite]