Q: Robert, I am in the middle of a short sale and was told that there is a government program that offers you $30,000 for short sale assistance. Is this true? And if so, how can I apply for this?
– Sara, Las Vegas, NV
Short A: “Yes.”
Long A: The long answer — Sara, many lenders are privately offering what is either called “cash for keys” — they give you up to $3,000 to help defray your moving expenses after you complete a short sale or trustee sale.
Short sale - A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance, typically, provided there’s a qualified buyer in the wings. Home owners likely to seek short sales are often those floundering “underwater” with mortgage balances larger than the value of their home.
Trustee sale - When a foreclosed property is sold by a trustee at an auction it is known as a trustee sale.
A federal government plan, “Home Affordable Foreclosure Alternatives (HAFA)” likewise gives sellers $3,000 for relocation assistance at a short sale transaction’s closing. The HAFA program is a great program because, in addition to the $3,000 assistance, any participating cannot come of after you for the difference between the sales price and loan amount balance.
In California, it doesn’t have to be a HAFA deal to keep lenders at bay for the difference. It is unlawful for lenders to come after a seller for any deficiency after a short sale. Certainly, as in all mortgage rescue, relief and bail out deals, certain rules and restrictions apply.
Let’s make a $30,000 deal. The $30,000 deal is rare. I have heard rumblings of other lenders offering the deal, but I know of only one lender who has granted it on a short sale — Chase Bank. Not all Chase short sales can land the $30,000 payout. You can’t ask the bank for the deal. There is no magic contact to tap. The individual Chase investor, who holds the note on your loan, has to make the offer to you. If you are qualified for the $30,000 offer, you will be notified in a “don’t-call-me-I’ll-call-you,” approach.
By the way, if you do get the $30,000 Chase deal, and if you are qualified for HAFA, you can get both and walk away from a short sale with a grand total of $33,000 in your pocket.
That is not small change.