We’ve all heard about the three thousand dollar short sale incentive that is paid to a participant in the HAFA short sale program. It doesn’t matter if the homeowner participates in a short sale or a deed-in-lieu of foreclosure, the homeowner will receive three thousand dollars if they qualify for and participate in the HAFA program.
Perhaps you have also heard about the Bank of America Cooperative Short Sale Program where borrower participants can receive $2500 at closing.
Maybe you have also had short sale sellers who have contacted you because they have received letters from Litton or Wachovia offering between three thousand and five thousand to participate in a short sale.
But, I’ve not seen a bigger incentive this one: thirty thousand dollars from Chase Bank. Yes, that’s right. Thirty thousand dollars!
A local seller who is having trouble making ends meet recently received a letter in the mail from Chase offering thirty thousand dollars as an incentive at closing. Like many other offers and incentives, you do have to read the fine print. The fine print here was on the backside of the letter and stated that the listing agreement must be submitted to the bank prior to May 24, 2011.
Since the seller was extremely skeptical, we contacted Chase to obtain more information and confirmed that the thirty thousand would be paid at closing if (and only if) they had the listing agreement in their hands prior to close of business on May 24th.
Just a few days after this occurred, another real estate agent told me that one of his sellers received an offer of twenty thousand dollars to participate in a short sale.
So, for those of you who believe that the bank would rather foreclose than approve a short sale, wake up. If Chase is willing to pay thirty thousand dollars to a seller to participate in a short sale, there may be something to taking short sale listings after all.
Have anything to say on the matter? Please share your thoughts in the comment box down below.
Photo: flickr creative commons by nono
Short Sale Expeditor
{ 91 comments… read them below or add one }
I don’t understand why they would offer that. Does that mean we shouldn’t request a short sale until they contact the Seller, is that when they will offer this. When does this happen before an NOD is recorded?
They offer it to motivate the seller to opt for short sale versus foreclosure–since foreclosure costs the bank so much more (apparently lots more than 30k).
and the foreclsoure takes longer and leaves the sellers in the house paying nothing
Obviously this is not to all borrowers, there is some special circustances ( loan, investor, property value,location) what determines the offer of this amount of money, it is out there and the lender is doing its homework to finally understand that it is better to give away 20K, 30K. Istead of waitting 6+ months and at the end the borrower file BK or trash the property.
An associate of mine just closed a short sale listing which netted his seller $20,000 at closing! It was an investment property with an out of state seller. My associate had heard something about this Chase incentive, and contacted them to find out what the criteria was after the transaction was approved and heading towards closing. Chase confirmed that this property would qualify, and awarded the seller a cool $20,000 at closing. Interesting twist, because Chase didn’t contact the seller. the seller’s agent contacted Chase, otherwise the $20,000 would never have been awarded….
Thank you Melissa for keeping industry professionals informed when you discover how the banks change their tactics. I really look forward to your updates. To the people who follow this blog and don’t know Melissa on a business level, she is a true professional and constantly studying information, doing the research to advise with wisdom and understanding.
sounds like this is a case by case incentive, which state is this happening in and how can we market these potential short sale sellers, if we are uncertain they can receive such an incentive?
Yes, I have a short sale with Chase and seller also got that letter! I thought it was a “come-on” by a short sale prospecting firm! Nope, Chase confirmed and I got the listing agreement in 2 days before the deadline!
I just closed a Chase short sale today ( 6-22-11 ) with Chase 1st & 2nd. My seller received $35,000 as a “incentive” to sell. I received the short sale approval letter and I could NOT believe my eyes !! I called my negotiator and he said ” it is Christmas in July “. I delivered the check from escrow to my sellers today !
It is definitely like Christmas. Glad to hear of your success!
What is the name of the program so that I can call for my Chase borrower/short seller? What department do I call? Would my normal negotiator know of this program? Thanks for any help you can give!
This incentive program is investor dependent. So you need to inquire as to whom the investor is on your short sale. Just ask your negotiator.
Thank you for responding! If it is Freddie Mac, what program do I ask for?
Bad news. Not for Freddie Mac. You can always call in and ask about future short sales. And, yes, sometimes it is Christmas in summer.
I have a wamu option arm mortage now with Chase, they tell me that the investor is wells fargo, not sure how this can be, I have about 4 hardships in a hardship letter, an unemployed and to get this incentive would change my life as I definately can’t afford to keep the house and of course it is way underwater, be great if you can let me know what my chance of getting some sort of incentive, was just about to call them as I got a letter saying my last chance – 7 days to be in the hamp program and they will take other collection efforts otherwise, I am in Florida.
Thank you.
Well, if you are being considered for the HAMP program, then I do not believe that your investor participates in this particular incentive program. however it wouldn’t hurt to call and double check.
What was your seller’s financial situation or criteria for qualifying
They are very well off ! Did not need or deserve it in any way. B of A is requiring ” seller contribution ” on senior citizens on fixed income, and since they do not have the ability to pay, the sale falls througgh and they untimately foreclose, then Chase pays financially stable people with the ability to pay ( not willingness ) a ” incentive ” to short sale. I don’t know who is right and who is wrong, but nothing is cookie-cutter in this businness !
I’m in FL and would like to short sell my house in order to receive the 20-30K incentive. I’m sure I qualify, due to personal circumstances. How does this process get started??
another Realtor just told me also that Chase gave the seller $35,000 at closing, Great!!, they over paid for the house anyway
Why aren’t other establishment offering the same incentives? Should I contact there RMA-Dept?
There are so many different short sale incentive programs, but this is the largest I’ve seen. Of course, it is limited to a specific investor. So, not everyone gets this sweet deal.
Can you give me the specific names of the incentive programs for the different banks? I have found that the Short sale bank negotiators do not know what their bank’s different programs are and what the edibility requirements are~ even for HAFA
This article reviews the programs (and yes, not all bank employees are familiar with the programs): http://agentgenius.com/real-estate-coaching-tutorials/coaching/its-finally-time-to-list-a-short-sale/
It nothing you can “ask” for. I received $35,000 and was only informed when the approval letter was received. Just work towards approval and hope for the best. I was told ” it is Christmas in the summer time “. Good luck !!
Does anyone know if the program requires the seller to be liable for deficiency balance?
That’s a great question. In California, we do not have deficiency issues and we have only done these deals in California.
I have a Chase incentive short sale in final negotiation–they have told me to put the $20,000 in the HAFA request for approval statement of expense (mini HUD). Also asked that the HUD-1 reflect the $20,000 as well as the $3000 HAFA incentive. Since this is a HAFA there is no deficiency–but with the new State law in California–none anyway the way I understand it?!
Joe: You cannot get both. You can have the Chase incentive or the HAFA incentive. I’d go for the 20k–since SB 458 provides anti-deficiency protection to our California short sale sellers.
I am the listing agent on a home with the incenstive from Chase. There is a 2nd mortgage on the home as well with GMAC. GMAC read the accetance letter and wants a larger pay off.
So everyone knows, I was told by Chase that none of incentive money cannot be used for the 2nd lien holder.
Margie, put on the HUD the 2nds requested amount. Chase told me the most they would do is $6000 towards the jr. lienholder. Thats what we ended up getting. Better than nothing!
We just rcvd our incentive check after the short sale. While we are thrilled, were wondering is this taxable? Will the government want 50%? We’re afraid to deposit/cash it for fear whatever we spend they will want it back in taxes.
All debt is forgiven ! Not taxes. Pure butter !! Part of the overall loss, treated the same as principle loss overall. Enjoy !
You should definitely check with an accountant. Since the deal closed and you agreed to accept the terms of the deal (including the incentive), I’d imagine that it would be taxable–whether you cash it or not.
I attended a Chase Short sale forum, and I ask specificially if this ” incentive ” is taxable, and the regional represenative from Chase could not answer me …. can you believe this ?? She provided me her email and asked me to email her and she would look into it and get back to me. 2 emails and 2 weeks later, still no repy
I just left her a voice mail also. Once I receive an ” official reply ” from Chase on this incentive taxable matter, I will share immediately. Hang in there !!
I would think the IRS would treat it as income.
dear melissa or others in the “know”
I have a few props…..as my world continues to implode i need a plan and soon….
some props are leveraged with first and second mortages… in one case a prop has the prime w chase the 2nd w wacho/wells….
have you run across a situation where BOTH entites offer “incentives”? just curious as i’ve read both banks doing it. wondering whether that could be played out…..before i start calling…..
or does the primary only do the offering as they control the final “sale” be it short or a sheriffs?
thanks.
PS over the years your site has been helpful
No, as Daivd states, the second lien holders do not offer incentives.
I have not seen 2nd offering incentives …… ;-(
My business partner was able to get an approval in 7 days from Chase but also was able to get our client 30K back as an incentive. We had two loans both from Chase and the second received nothing. We closed in 1 month and a week from the time we received the offer. This was the shortest short sale thus far. We are still pinching ourselves that Chase actually moved this fast and our client was ecstatic to say the least.
Congratulations Elizabeth ! That time frame has got to be some sort of record
One question … did you business partner ” get your client ” the incentive ( ask and negotiate in some way ? ), or did it just show up on the approval letter out of the blue ?
I have a 1st and a 2nd with chase, and the property is in California. My renters have gone bad, and I don’t think it’s worth keepping as a rental. What is the best way to go about getting rid of property. Do I stop payments, and move towards forelosure, or do I contact the bank and tell them I want to short sell? What would give me the most leverage? Do I have my relator be the nogotiator, or do I hire an someone else? Thanks for any replies.
Robin
If you have listed the property for sale with a real estate agent who has listed many, many short sales, then I would follow your agent’s lead. Many agents have loads of experience with short sales and use our short sale negotiation services because they find it to be very effective. Others prefer to handle the negotiations themselves. So it’s a good idea to look into the past experience of any agent that you plan to hire to list your home. Contact our office directly and we can put you in touch with a short sale agent in your area.
I have a question I just closed a short sale with Chase. The homeowner qualified for Hafa 3,000 total forgiveness and he also received the incentive from Chase 10,000. But someone jsut mention to me and the bank is not supposed to give both because with HAFA the homeowner is not allowed to received any money from the bank proceeds. But if the bank approved it then he should have no problems in the future?
I will appreciate any feedback
Thank you
Mel: You bring up a great point. While the incentive programs were never intended to encourage ‘double dipping,’ it does happen. However, since all HUD-1s are approved by the short sale lenders one last time before close of escrow, then it seems that you would be fine. As David also states, the HAFA money is technically a ‘slush fund’ which is why some short sale sellers may be able to take advantage of the extra incentives.
I believe you may be thinking of Arms
Please inform your sellers they will receive a 1099 M next February, so they are not shocked. Best to place $4,000 in a savings account for this tax bill 
Hope this helps 
Length verbiage ” Shall not receive any proceeds from the “SALE” of the property ?. This $10,000 “incentive” is instituted from the lien holder, not HAFA. This “incentive” was not on the HUD, so it does NOT come from the sale proceeds ….. it is a ” slush fund” if you will from the lien holders themselves, so its their money and they can do whatever they want
My client just got notified that he is getting $35000 incentive from chase, plus $3000 HAFA and the house listed in August.
Pam: What a score. Thanks for sharing!
I have processed over 15 Short Sales through REO Prep the past 6 months. These were all through Chase. The incentive varies from property/investor to the next, I have seen 10K up to 30K. To be honest I think its crazy that this is happening and it may only cause strategic short sale planning but when I have listings handed to me I guess I cant complain.
Bank of America has also begun to add these incentives in Florida. So, we are being told that they may be headed to California in the near future. Hard to believe, huh? Glad to hear that short sales are keeping you busy!
With a Chase short sale, how long should we expect from the verbal approval until we get the written approval? Chase has set a closing date of Nov. 21st and it’s already Oct. 24? Any help you can provide would be greatly appreciated. I represent the buyer. The seller’s agent said he called the negotiator and she said, ‘Wait.” I don’t know what that means. Thanks!!
Usually, it takes under a week for the final written approval. However, I have seen times when it has taken much longer and then you have to go back and ask for an extension on the closing date. (It actually sounds like you may have to do that, but just wait until you obtain the approval letter first.)
i am waiting on escrow to close on my approved short sale, thru chase bank, i just heard about this incentive bonus, i asked my realtor to inquire with negotiator about qualifications, i believe im in-titled to such incentive, negotiator called my realtor today 10-26-11 and told her she doesnt know about how its determined or , who at chase determines it, is this b/s ? how do i confirm this info, and does anybody know what are the guidlines if any, and who do i talk too? can anybody point me in right direction please…
In my experience, they are probably not “b/s-ing” you. It’s possible that the person who processes short sales for Chase (for your particular investor noteholder) is not familiar with the program because s/he does not handle those kind of loans. Have you called the general toll free nuber to inquire? (This is investor-specific; there is not a person at Chase that selects people at random.) Hope that helps.
Hello!
Could you help us clarify the difference between requeritments for the Short Sale Incentive. Our realtor told us that we qualifiy for the $3,000, but not for the 20,000. What is the diference between both programs in orden to qualify? We already have an offer in (the amount setup by the bank), just waiting for the bank final papers to close the house. What department work with this particular program in the bank? We have Wells Fargo! Are they participating in this big incentive?
Please let us know.
Thank you!
Jacqueline
Your loan is with Wells Fargo. The larger incentive programs are not thru Wells Fargo right now. You MAY qualify for HAFA, the government program. If you do, you will get 3k at closing. Wells Fargo participates in HAFA–but not for all loans.
Help Please!
Are the FHA loan qualifies for the 3k at closing? Today my realtor told me that the Loan Adjustor from Well Fargo said that FHA loans are not eligible for the HAFA program.
Can you help me out?
Thanks,
Jacqueline
I believe that your agent is correct. Sorry.
Hi Melissa… thanks for the great information… I wish I had a Chase mortgage with the right investor! A friend in NM got $20K from Chase this past July… and she was shocked. She had walked away from the home in 2008.
Unfortunately, BofA is my servicer and Fannie Mae owns my loan. I read last month (as you posted above) that BofA is doing a trial cash incentive program in FL starting in Nov and ending in January 2012, with payouts between $5K and 20K… and that if it’s “successful” (don’t know the defintion of success to them.. I guess if enough people do it) they will roll out the program to other states.
Have you heard any more about BofA’s program? I am quite interested in this as I have put so much into my house, but have just lost my job and in there are no other jobs in my field in the area. I would love to recoup something as an incentive in a short sale.
Thanks much.
Carol: Unfortunately, I have no additional information about this program right now. If I hear something (anything), I’ll definitely post to the blog.
Thanks Melissa!
I am a builder in IL and we are buying back a condo in our building, the short sale lender is Chase and they are giving the seller $20,000. and they ARE placing this on the HUD1. Why would the bank offer to do this? The seller does not live in the property, how is this even possible?
I
Generally, they do this because they realize the cost of foreclosure, marketing the property, and preparing for a resale, will far outweigh the 20k. Thanks for stopping by our blog!
If they place this incentive on the HUD, that is GREAT ! It now becomes part of the closing costs and firgiven debt. If NOT obn the HUD, the seller receives a1099M as taxable income.
I heard that Wells Fargo and Chase have given seller’s at closing as much as $20,000 -$30,000 on short sales, crazy. I have one closing next month and it is not one of these banks, let’s see what see gets. I think Bank America was also one.
I am currently in the process of a short sale with Chase in AZ. We are also a no-deficiency state. However, not only am not getting $20k, I received my approval letter and was told that I would have to sign a note for $22,000 to the “investor”. Have you heard of this?
Hi Melissa,
I should have specified in my previous post that the promissory note is from MGIC. I never had mortgage insurance on my mortgage. Also, if I sign this note and the loan does not close for some reason I am afraid I am still on the hook for the $22,000.
I look forward to your response.
Thank you,
Brian
Generally, the MI companies can be very difficult. If you do not agree to their terms, than they can force the short sale to become a foreclosure. You may want to speak with an attorney and find out what kind of remedies you might have after closing in order to avoid paying this 22k debt.
Thanks Melissa. As I do not have mortgage insurance does this mean that MGIC is the “investor”?
You’re absolutely right about the attorney I have an appointment Thur. Have you heard of cases where sellers can get out of paying this debt?
Thank you for your valuable time,
Brian
my seller was with bank of america they had just sold to greentree and they pay nothing:(
with the money they get they can buy another house through the lender:)
Hi Melissa and Readers,
We received such a letter and the incentive was $30,000. Chase gave us a list of realtors who would help us put our house on the short sale market.
I told the realtor about the letter and sent it to him. He did transfer to his sales manager who stated he received it. Periodically we inquired about the incentive. Everthing was supposed to have been taken care of.
At closing, we asked again. The sales manager said he needed to check with his negociator The negociator was absent and absent again, finally, the negociator replied to the sales manager (not to us) that the Bank advised that it had no more money. Quite difficult to believe… I called Chase who said that the money should come out of the proceeds. We called again and again and finally were told that the real estate people did not do what they were supposed to do, though they let us believe that they took care of everything.
Can anyone give me any advice or refer me to an attorney. We would very much appreciate.
Thanks for your time.
Peter (1/5/2012)
That is such a shame. I’m not quite sure what your recourse would be. If you are in California, I would start with the agent’s broker, and then move up from there–as needed. The incentive is always on the final settlement statement and is paid to the seller at the closing table. As to whom exactly dropped the ball, without all the details, it would be tough to point fingers. I’m so sorry to hear that this happened to you.
We received the short sale approval from Chase and did stated that we are going to receive the incentive check of 35k. Our 2nd mortgage is with Bank of America bought out by Real Time Sol., now they’re asking us to pay them 38k before they can release all liens? Otherwise, the house will go on forclosure. Cannot believe that the 2nd mortgage will take all the money that Chase will give us. Is this legal? Please advise. Thank You.
Hhmmm. that’s a tough one. I cannot really speak to what is legal and what isn’t, since we are not attorneys. Of course, short sale is a form of debt settlement, and Realtime does not have to agree to a short sale if they do not want to. In California, SB 458 will protect a short sale seller from deficiency if the seller participates in a short sale. Are you in California? Maybe Realtime knows that they have no recourse, and have decided that this would be their best course of action. That’s a bummer. 35k could put a kid through public university in California. That’s a lot of money!
Are these incentive payments (both HAFA and Chase) for homeowners only, or can a non-owner occupied property owner get them?
HAFA is for owner-occupied and those who have moved within the last 12 months.
Melissa, thanks for the quick response.
What about the Chase incentive payment? Is that also for owner occupied only?
I think they changed the HAFA requirements—now non-owner buildings are OK.
I recently purchased a short sale property in Chicago. Chase gave the owner a $45,000 incentive payment and he got the $3,000 HAFA payment too.
What a country—he collected $3000 per month rent for years without paying a nickel in mortgage. Then he gets $48,000! I held my nose while signing the documents, but I got a great deal.
Wow. That’s a big incentive. Sounds like you got a good deal. Thanks for sharing and visiting the blog!
My husband is 100 % disabled veteran from combat. We acquired our loan in 1/2007 and he was awarded his disability May, 2009. He has had a transplant and it failed and this was all documented in our chase hardship letter. I was unemployed from 2/2007 5/11/2011. My husband is a partner in a business and the by laws prevent him from providing partnership P&L. However we have turned over all filed income taxes and bank statements. Chase declined a short sale with a back up offer that matched the comps in the neighborhood. Why would they decline two offers and close the file over a business p&l that does not reflect our ability to pay for our home that is now vacant? They have clear evidence of our medical costs, a formal letter designating his proven disability and my past unemployment. We tried to keep up until 8/2010 and we finally gave up feeling drained which is when we listed the house as a short sale. What would cause chase to close the file and move to foreclosure?
Kay: That’s a tough story to hear. I’m not certain as to why your short sale wasn’t approved, and it sounds like I might be missing a few details. We have very good luck with Chase Bank, although sometimes we do have to push our cases to the executive offices. There are so many additional questions I’d like to ask–maybe off the blog.
We question the negotiator our realtor brought on to help. He repeatedly requested documents we already provided and in some cases lost documentation. I am not entirely confident he was diligently following up. Although we provided authorization for this gentleman to communicate relating to our file, we received a letter from Chase directly that the file was closed “due to missing documentation”. Chase did not identify what was missing which leaves us a bit surprised and I can only guess it was the P&l we explained could not be delivered.
Hi Kay, If all the documentation is not received, they will close the file. A P&L for 1099 employees is required. if 2 – 3 weeks goes by after the negotiator is requested to provide, they will close the file.
Hello Melissa and to everyone reading,
I am very interested in the short sale incentive. I live on the outskirts of Chicago. Any advice to get started. I have had NO luck with obtaining information from Chase. I’ve even talked to the Attorney General regarding the recent settlement with the top banks; such as Chase, Wells Fargo, Citibank, etc.., but no luck.
I would shortsale for at least 25k. I’ve been in foreclosure for three years. I’ve gone through a modification and was approved. Chase was requiring me to pay a loan amount of 300k over a period of 40 years. However, my home was appraised at 105k. Chase rejected my request for a principle reduction. And I declined the modification agreement.
Any suggestions/advice to complete a shortsale and receive 25k or more.
Thanking you for your time and consideration in this matter.
Okay, so here’s the deal. Obviously in the last week or so, the Chase incentive has gotten some big p.r. due to the Bloomberg News article and a few wannabe articles on the same topic. The humongous incentive offered by Chase (Citi and SPS, too) has nothing to do with the AG settlement. And, unfortunately, as much as you try to get information about the details, it’s gonna be tough to get the straight dope out of Chase.
As far as I can tell (and we’ve closed 10 or 20 of these), it seems to be investor dependent (remember that Chase is a servicer for multiple investors). Certain investors have guidelines that allow for specific things (such as an incentive or payment of pest control, property taxes, etc). In a way, it is not going to be something that can be extracted from Chase by some super savvy negotiator or real estate agent. If the borrower’s loan meets the guidelines, the borrower will get the money. If the loan does not, then the borrower will not get the cash.
How do you know if your loan meets the guidelines? Well, you can borrow my Magic 8-Ball, or you can submit your short sale file and the Chase employee who finally gets to process your short sale will let you know. Short of that, it may be tough to get the answers that you want. Hope that helps!
Hi Melissa, The reporter for Bloomberg actually contacted me and interviewed me for that article, I believe because of this blog. I looked all over for the article and was not able to find it ;( Can you let me know where I can view this ? Much appreciated
Yes, I was also interviewed for the article (which was quite lengthy). The reporter was Prashant Gopal; you could probably Google his name at Bloomberg and find the article.
I am involved in a short sale also with Chase and there is a second lien holder on the loan with Chase being the primary holder. Chase is offering 10k to me at the signing of the sale which is great. Since Chase was the primary holder, they determined the amounts they would take and how much they would give the second lien holder. When the second lien hold heard about the Chase incentive, the refused Chases amount and said they required more or they would refuse the deal. So I am forced to either let it foreclose or agree to let the second lien holder take the incentive.
Is this legal?
Not being an attorney, it would be difficult for me to say. However, it does stink like something rotten, doesn’t it? We had some situations like this one (not many), but I’ve never seen the lien holder attempt to take the whole amount.
No bank is ” obligated ” to accept a short sale, and if they do they have every legal right to request any amount of funds to ” settle the debt “. If this money can be used to obtain an Approval Letter, then give it to them ( 2nd lien ) . You probably lived in the home for 9 months or so for free, and not paying property taxes, so consider this the cost of living and don’t think you ” deserve” this money…..
Thanks for your feedback Melissa and David. I realize banks are not obligated to accept short sales and understand the banks objectives. My issue is I put more than 50k into this home including down payment and repairs. It was a rental throughout my ownership so I never lived in it for free. Banks don’t take that into consideration. So “yes” I do feel I deserve this money.
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