Bloomberg reported yesterday about a growing trend where banks are paying sellers up to amounts of $20,000 to $30,000 to complete short sales vs. letting the home go into foreclosure. In some cases banks are finding they are saving money to work with homeowners who haven’t been able to afford to make payments and are underwater in the homes. Typically it will cost the bank more money to go through the foreclosure process than to work directly with the seller to remain in the house, take care of the house and to find a suitable buyer for the home. In addition to payment amounts some banks are giving sellers of successful short sales there is also federal money available (typically up to $3,000) to help short sale sellers relocate out of their homes.
If you find yourself in the unfortunate position of no longer able to make your mortgage payments, there are options, banks in some cases are granting loan modifications and that should always be the first step. If that does not work, it could be beneficial to consider selling the house for less than what you owe before just walking away. Many homes that go into foreclosure never were on the market as a short sale. Often the life events that cause the hardship in making payments, prevents people from looking for solutions. Putting your home on the market as a short sale may not be for everyone, but the additional money that some lenders are currently offering might be a reason to explore this option.