Louisville Short Sales Q&A: Can the Seller Get Any Money Out of A Short Sale?

Can the seller get any money out of a short sale?

FHA and participating HAFA lenders actually give sellers “cash” incentives for completing a short sale. The seller gets a check in the amount of the approved incentive.

FHA Cash Incentive to Short Sale Sellers

If the loan that is being approved for a short sale is an FHA loan, the seller may receive up to $1,000 from HUD. HUD is the acronym for Housing and Urban Development.

The HUD guidelines state as follows: (The word “mortgagor” refers to the borrower who is selling the house)

“HUD will pay up to $1,000 incentive to the Mortgagor if closed within 3 months from the date of application; thereafter, the incentive is reduced to $750.”

The guidelines quoted above can be read at http://www.hud.gov/offices/hsg/sfh/nsc/rep/pfsfact.pdf

HUD guidelines periodically change as the government refines their guidelines in an attempt to address the foreclosure crisis. Please click on following google search to stay current on latest HUD guidelines:

Google Search: FHA short sale incentive to mortgagor payment at closing

HAFA – Home Affordable Foreclosure Alternatives - Cash Incentive to Sellers

In April 2010 and in June 2010 a multitude of lenders and entities that back loans signed up to participate in a new program named HAFA. HAFA is governed by an elaborate set of rules and guidelines. If the seller and the house qualifies for the HAFA short sale, the lender will deliver up to $3,000 to the seller for “relocation expenses”.

The HAFA guidelines state:

Borrower Relocation Assistance. If the closing of the short sale occurs in accordance with this RASS, you will be entitled to an incentive payment of $3,000 to assist with relocation expenses. We will instruct the settlement agent to pay you from the sale proceeds at the same time that all other payments, including the payoff of the Loan, are disbursed by the settlement agent.

These programs and their terms tend to change or even get cancelled. Please click on following google search to stay current on latest HAFA guidelines:

Google Search: HAFA short sale borrower relocation assistance expenses incentive payment at closing

It is also almost certain that new programs will be innovated in the future that currently don’t exist.

So how does the seller stay current on the opportunities to receive cash incentives from a short sale?

Always consult a Realtor who specializes in short sales.

Dave Halpern

Louisville Short Sale Expert Realtors

(502) 664-7827

Dave successfully helps dozens of families each year avoid foreclosure by procuring a short sale with their lender. Dave lists the house, does all the work, the lender pays the commission.