Bank of America homeowners are a few of the men and women who are trying short sales and deed in lieu of foreclosure programs as a way to avoid a formal foreclosure, as many homeowners see this route as more favorable when facing the loss of their home, rather than resigning themselves to the foreclosure process, which is a negative stain on any homeowner’s credit history. However, recent weeks have brought about information and opinions related to short sales, in particular, as these plans are not necessarily as beneficial as some believe them to be, but when it comes to data released here in the month of June, which tracks the short sale and deed in lieu of foreclosure plans for Bank of America after a homeowner has gone through HAMP, there were decreases reported.
In terms of these sets of data for Bank of America’s short sale or deed in lieu of foreclosure plans, Treasury Department information from February indicated that Bank of America had a total over 23,000 short sale and deed in lieu of foreclosure is in process or completed, while the March data, which is from the most recent report, showed that this total number of foreclosure alternatives stood at 14,661. This data was for homeowners whose trial modification was canceled, but for homeowners is who were not accepted for a trial modification, the number also decreased and, according to these reports, stands at only 29,543.
While new reports from the Treasury Department are due out in a few weeks, and may show more positive results in various areas of the modification program, these drops in foreclosure alternatives does not mean that homeowners are unable to participate in these plans, nor is this the only indication of short sale or deed in lieu of foreclosure activity necessarily, but there are some homeowners who feel that short sales are not as beneficial as it would seem. These notions have been backed up by FICO data which also indicates that homeowners are still seeing financial setbacks even when they participate in a short sale of their home.
Arguments over this issue have continued as there are those who have data that show short sales can do just as much damage to a homeowner’s credit score as a foreclosure, but there are some who feel that a short sale will show that a homeowner was in a position where financial distress occurred as no fault of their own, since homeowners must show documentation that these financial hardships have arisen, and many are caused by factors like unemployment. Also, some believe that short sales indicate that a homeowner may not necessarily be a risky investment due to the fact that issues like unemployment may be present, yet homeowners are being prompted to explore foreclosure prevention rather than alternatives before entering into a short sale agreement.
There are some reports that state banks are becoming more active in the short sale game by either contacting homeowners or working with realtors to make sure that homes that are being sold through the short sale process are filled quickly, but again short sale or foreclosure alternative plans may not be a way for homeowners to necessarily avoid damage done to their credit score and, as a result, this may give reason for homeowners to explore other options before turning to this particular program from their servicer.