When a homeowner sells their home as a Short Sale, the entire proceeds of sale after settlement charges go back to the loan servicer. One of the settlement charges may be a Borrower Incentive. Also known as Relocation Fees, a borrower incentive is a check that is disbursed directly to the Short Seller at the time of closing.
Depending on the type of Short Sale program you qualify for, this fee is offered as an enticement for a homeowner to opt for a Short Sale rather than to allow the home to fall into Foreclosure. Because banks generally net more on a Short Sale than they do on a Foreclosure, they have come to realize that offering borrowers a financial enticement will result in more Short Sales being initiated.
Not all Short Sellers are eligible for Borrower Incentives. Generally, if it is not a primary residence that you are Short Selling, then you will not be eligible for any borrower incentive.
If the subject property is your primary residence, then the incentive will depend on your loan type and Short Sale Program. I have had clients approved for as much as $23,000 in borrower incentives, and have read about other borrowers receiving as much as $50,000 in borrower incentive fees.
A savvy Short Sale professional should be able to give you an idea of what type of Borrower Incentive you may be eligible for. Contact me if you’d like to learn more about your opportunity for a Short Sale Borrower Incentive.