We have recently seen some major financial institutions offering incentives to homeowners who participate in alternatives to foreclosure, specifically short sales, in the form of monetary compensation that may help homeowners with relocation and meeting certain costs that may have arisen when these homeowners have found themselves in a difficult financial position. Some of these banks have termed these programs in different ways, with some offering cash for keys programs, while others are simply using relocation assistance plans as part of a short sale agreement to not only help homeowners transition from home but potentially make the transition much smoother.
If homeowners have found themselves in a position where foreclosure may have been close they are likely to have found also that other areas of their financial life may have seen setbacks, as many homeowners who are losing their home have usually found themselves in a position where meeting financial obligations has become difficult due to various factors.
However, these relocation assistance programs have been beneficial in some cases as it not only helps with homeowners when it comes to participating with banks in short sales and other foreclosure alternative programs but they can be beneficial to homeowners in need as moving, finding an apartment or home to rent, and simply meeting additional costs can be a strain on homeowners who are already financially distressed. Federal short sale programs typically offer relocation assistance plans that may pay some homeowners a few thousand dollars but we have also seen reports over the past few months that some banks are offering homeowners anywhere from $10,000-$20,000.
While this is not a standard payout that homeowners always received, some banks feel that by offering homeowners these incentives they can make the process much smoother and in cases where homeowners may have otherwise left the property in disarray there are ideas that incentives can not only help with the transition from one living arrangement to another but may help those who might be upset over the loss of their home to at least keep the property in a decent condition. Ideally, banks will use these short sales and relocation assistance incentives to quickly transition one homeowner from the property and another homeowner who can afford the mortgage into the home, but this is not always an easy process.
However, there are still arguments being made that homeowners do need to try and at least explore alternative foreclosure prevention efforts before turning to these alternatives as it is not always the case that a homeowner will benefit from a short sale, particularly if this will do a great deal of damage to their credit score. Yet, some homeowners have welcomed the opportunity to sell their home, which may have seen decreases in equity and is simply too expensive for homeowners to afford, and may also offer financial compensation that can help homeowners start a new chapter after the loss of their home.