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Banks offer financial incentives to homeowners to avoid foreclosures

Banks such as JPMorgan Chase, Wells Fargo and Allied Financial are offering incentives of as much as $35,000 in cash to homeowners who opt for short sales, as part of an effort to get troubled mortgages off their books, Bloomberg News reported.

The move towards accepting less from a buyer than a seller’s outstanding loan makes sense for the moment, especially given the current foreclosure backlog, since it’s a faster process than a foreclosure, said Bill Fricke, senior credit officer for Moody’s Investors Service.

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Short sales accounted for 33 percent of financially distressed transactions in November, up from 24 percent in November 2010, according to data from CoreLogic.

A spokesperson for JPMorgan Chase declined to comment on the increase in incentives, saying simply: “When a modification is not possible, a short sale produces a better and faster result for the homeowner, the investor and the community than a foreclosure.” [Bloomberg]

Tags
ForeclosuresShort Sales