Bank of America has begun a pilot program in Florida offering extra incentive payouts to distressed homeowners who agree to and successfully close on a short sale.
Incentive payments for relocation assistance range between $5,000 and $20,000. The program is being offered on a limited basis for investor-approved, pre-offer short sales.
Bank of America is calling it a pilot “test-and-learn” program.
A spokesperson for the bank explained that Florida is experiencing higher foreclosure rates than other parts of the country, and is therefore seen as a “viable market to gauge incremental short sale response and completion rates when presenting homeowners with relocation assistance at closing.”
If successful in Florida, Bank of America says the “test-and-learn” could be expanded to other states.
The short sale must be initiated between September 26 and November 30, 2011 and close by August 31, 2012.
Florida homeowners who qualify for the “test-and-learn” program will receive a solicitation mailer directly from Bank of America, or may learn about the program if they are working with a real estate agent who handles pre-approved short sales for BofA.
The bank has a dedicated team of short sale specialists standing by to help agents determine if their homeowner client qualifies for the short sale relocation assistance at: 877.459.2852.
Bank of America has already been offering short sale payouts in the state of Florida, albeit for smaller amounts.
Susie Kirkland with RE/MAX Southern Realty in Destin says she’s closed five transactions within the past couple of months through what BofA calls its Cooperative Short Sale Program. The bank awarded Kirkland’s short sellers $2,500 upon closing.
BofA is even extending short sale incentives to some investors. Steve Kravitz of Bankers Realty Services, Inc. in Fort Lauderdale just completed a short sale transaction last week on an investment property. BofA offered the non-occupant owner/seller $3,600.
Kravitz says his client had been late on a few payments, but there was no foreclosure filing on the property. BofA and other lenders are looking to short sales earlier on in the process, and getting ahead of the foreclosure crisis in areas where the system is already bogged down with distressed properties.
“We’ve had cases here where we’ve gotten short sales through where there haven’t even been any late payments at all,” Kravitz said.
Kravitz says short sales just make sense for a market as hard-hit as Florida. Not only can a short sale be more cost efficient when lenders are facing a foreclosure timeline of nearly two years, but it “gets more product and better product out to buyers.”
He explained that oftentimes, a foreclosure property can sit vacant for more than a year, whereas with a short sale, the home is typically occupied up until a week or a few days prior to changing hands, which translates to a better quality home in better shape.
Kravitz says banks are becoming “more cooperative” and approving short sales more quickly. The investment property short sale Kravitz closed last week took just 45 days.
Other lenders are also extending incentive payouts to short sellers in Florida and some other hard-hit states such as California.
In July, DSNews.com reported that Wells Fargo, JPMorgan Chase, and Citi were all offering extra relocation assistance to borrowers opting for a short sale in certain markets.
Robert Valenzuela with Century 21 Schwartz Realty in Key Largo, Florida, says he’s completed six short sale transactions in which the seller was given money to help with relocation, the largest of which was a $45,000 payment from Chase Bank.