Getting Paid to Leave Your Home

Obama's latest approach to our housing woes is paying some homeowners to leave. This will allow owners to sell for less than they owe and will give them a little cash to speed them on their way. If you think $1,500 is going to be much help after you leave your home, then your needs are more modest than my own..


We are not seeing many foreclosures on Orcas, but Natiionwide, more than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped very few. The Modification program is a joke, the banks have the money and they clearly don't want to share!  You can never talk to someone who can actually make a decission, and you can never even speak to the same person twice. You will be asked to constantly update your financial information and a program that should take two weeks is often still in limbo after nine months. Personally I have created an entire human being in that amount of time!  If they can get you  mortgage in 15 to 30 days why not a modification?

The new plan is a Short Sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed. This plan sprung from the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers  to shed their houses thus creating the biggest land grab this country has ever seen!  Goodby to the middle class! Hello poverty. What happens to all these former homeowners who have ruined credit, no home, stressed out marriages and upset children? It can't be good for our country or our neighborhoods.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.” Personally I have wondered why the money was given to the banks in the firsrt place, why not give the distressed homeowners the $18,000 that was allocated to the banks for each distressed loan? Too simple? Or is the banking lobby just more important than real live folks?

Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure. That's because it costs the banks $40,000 to $60,000 to foreclose on your home.

For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance, so there is some good to come out of this after all!