[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
Potential foreclosures are turning into short sales as the banks kick it into high gear.
According to Duane Legate of House Buyer Network, "Banks have ramped up short sale approvals. They're hiring a lot of the people who once worked in the mortgage-lending industry and moved them over to short sales.
Not that a short sale is really any better than foreclosure. Either way it hurts your credit score. On average borrowers lose 200 points from their FICO score for a foreclosure, while they lose 100 points for a short sale.
But with the banks losing 50% on a foreclosure and 30 % on short sale, why not help these homeowners stay in their home? Because everyone is getting a cut on the deal.
You may remember the slap in the face we got from Indy Mac's short sales deals and now here is another back door deal. Under the new Home Affordable Foreclosure Alternatives Program, borrowers will earn a $3,000 "relocation incentive" and servicers will get $1,500 for handling a short sale.
Investors who own the mortgage notes get $2,000 for sharing proceeds from the short sale with secondary lien holders. At the same time those second lien holders can receive up to $6,000 for releasing their claims.
More and more money is being dumped into these home programs, but is it really helping the homeowner? Leaving them homeless while everyone else is cashing in on their misfortune.
Something is fishy here.
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