If you’re one of the many Florida homeowners struggling to make ends meet, to make your monthly mortgage payment or are facing foreclosure of your Orlando area home, Bank of America is offering a new incentive to Florida homeowners. In exchange for short selling a home rather than taking the bank through the foreclosure process, Bank of America is offering up to $20,000 to some Florida homeowners.
In order to qualify, a short sale must be submitted for approval to Bank of America by November 30th. In addition, a home must not currently have an offer or offers pending and the sale must close by August 31, 2012. Not all short sales will qualify for the $20,000 payout to sellers, but the reported minimum payout is $5,000.
The Florida foreclosure process is averaging almost two years from start to finish and is almost twice that of the national average. It is believed that Bank of America is trying to encourage homeowners who may be facing a Florida foreclosure to leave a home sooner and in better condition than some foreclosed properties have been by offering a relocation fee or bonus to the cooperating homeowner.
What Exactly is a Florida Short Sale?
A short sale, or short-selling a property, is selling a home for less than what is owed on the property. Under Bank of America’s current program, it will often agree to not seek a deficiency judgment from the seller for the remaining unpaid mortgage when a short sale is approved.
For example, if you owe $200,000 on your home and the bank agrees to a short sale to a third party for $150,000, you may or may not then owe the bank the additional $50,000. The house would be sold, possibly free and clear of any deficiency from the unpaid mortgage balance, depending on your lender.
Short sales can be legal land mines however. Understanding the possibility of being subject to a deficiency judgment by the lender as well as considering whether or not there will be tax consequences from the sale should be discussed with a Florida short sale attorney prior to signing any paperwork from the bank.
Similar cash for keys-type programs are available through J.P. Morgan Chase and Wells Fargo.
Source: Sun-Sentinel, “Bank of America offers $20,000 short-sale incentive to homeowners,” 7 October 2011