Not your typical Sunday barbecue. With that scene in mind, I just came across this interesting CNN article regarding short sales. Evidently, some of the major banks are starting to pay their delinquint borrowers to sell their home via short sale. So sayeth the article:
In an effort to cut their losses, banks are paying some struggling homeowners as much as $35,000 to sell their homes before they end up in foreclosure. The deals are aimed at incentivizing homeowners who owe more on their home than it is worth and who are seriously delinquent on their payments to sell their homes in a short sale.
While I don’t expect to see a stampede of home sellers deciding to stop paying their mortgages because of an article that they read on the interweb, it is an interesting turn of events for a number of reasons. Banks are essentially acknowledging what they’ve known for a very long time: foreclosures cost them more than short sales. From the same article:
Homeowners not only stop paying their mortgages but they stop paying property taxes and conducting normal maintenance as well. Roofs, siding, plumbing and other parts of the home deteriorate and the property loses value. By the time banks take possession, they’re out tens of thousands of dollars.
Perhaps more importantly, it suggests that there’s some order being applied to the morass of housing distress. Short sales are by no means a walk in the park, but I’ll take any sign of lender “”enthusiasm”” for them as a sign that we’re moving in the right direction when it comes to distressed property.
Edit Credit: CNN.com (Hat Tip: Kevin Jones)