In a move that could help many homeowners struggling with making the payments on their mortgages, one bank, JP Morgan Chase, has announced a program that could be beneficial to both themselves and the homeowners. It could also help clear out some of the inventory of homes for sale in Tampa and surrounding areas, which could in turn help home values stabilize and facilitate a turn around in the Tampa real estate market.
Here’s the deal. If a home owner behind on their payments accepts a fast sale of their home, the bank will give them $10,000 to $20,000 and forgive what it loses on the mortgage. Homeowners get the money after the home is purchased in a short sale, which is a process I have supported for several years now.
The advantage to Chase and other banks if they would follow suit, is avoiding the need to foreclose which can take upwards of two years in Florida. The bank saves money on attorney fees, court costs, property taxes that aren’t being paid by the homeowner, as well as association and condo dues in some cases.
This program will get bad loans off their books and help the real estate market in our area as well. Homes that end up in foreclosure are usually run down and are not maintained. They sell at a deep discount and affect the values of homes in the surrounding neighborhoods. It’s a ripple affect that has contributed to declining home values across the Tampa Bay area.
With this type of offer on the table, banks save money in the long run, even if they do pay out ten to twenty thousand dollars in order to get the house sold and out of the inventory.
Florida has more than 300,000 foreclosures. Thousands of other loans are in default and more may go into default because the homes are worth less than what is owed. This type of deal is the best possible solution in my opinion and hopefully, other banks will see the advantages in offering something similar.