Why Banks want you to Short Sale

what is a short saleIn 2005 or 2006, if You were up-side-down on Your home and contacted the Bank to request a Short Sale, they might have laughed in your face.  So why are Banks so interested in helping Homeowners do short sales in San Diego? Why are the banks paying people $30,000 to do a short sale?

The Banks are only concerned about one thing…money. So why have they become so generous lately? The Mortgage Insurance companies went out of business. You see, in the past, the Mortgage Insurance, (which is paid for by the Homeowner even tough its CYA for the Bank), would pay the bank any money lost in the event of a Foreclosure on a property. Therefore, the Bank was totally fine with Foreclosing because they would essentially get paid in-full by the Mortgage Insurance Company.

These days, however, the Mortgage Insurance Companies who had policies on homes in distress right now, are all out of business… So the Banks had to take a hard look at how the heck they could get the most money for these “Non-performing Assets” or homes where the Homeowners weren’t paying the Mortgage.  Without the Mortgage Insurance Companies to pay out, the Foreclosure route was becoming quite problematic (expensive), so they decided to start promoting and executing Short Sales in San Diego as their primary strategy to mitigate losses.

Of course, we must ask the question… What happens in the future? What happens when people who want to Short Sale are  paying Mortgage Insurance to a Company that still exists? Will the Banks be willing to do a Short Sale and let them off the Hook?  The answer is obvious. The Bank will always do what makes the most Money. It’s just that simple. So You tell me… If the Bank can get payment in-full from the Mortgage Insurance Company, why would they let You do a Short Sale in San Diego?

My guess is…they won’t.

Now is a perfect time to get away from a bad Real Estate Investment at a time when the Banks are incentivized to help You. This won’t always be the case. Remember, The Mortgage Debt Relief Act expires at the end of the year!

In my opinion, if You’re up-side-down on a property, You should become educated about your San Diego Short Sale options. Call it a “Business Decision” or call it whatever You want… This is the smartest financial move for a lot of people right now and it’s my responsibility to make as many people aware of that as possible.



Categories: Foreclosure, San Diego Real Estate Market, Selling your home, Short Sale, The Mortgage Debt Relief Act

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