There’s a Linked IN feed I receive every week started by a Realtor who said that Chase Mortgage is giving the homeowner $25,000 for moving assistance on a short sale. The email chain goes on with short sale agents from across the country sharing stories about similar scenarios where their clients received a generous moving assistance check from Chase.
Q: Why would Chase be so generous to homeowners who are often badly underwater in their home, meaning they owe $300,000 on a home worth $150,000?
A: Chase was handed Washington Mutual on a silver platter for pennies on the dollar. The FDIC also has loss guarantees that keep prevent the acquiring bank from taking big losses on WAMU legacy assets. Most of the recipients of Chase’s cash-for-keys largesse have old WAMU mortgages that are now owned and serviced by Chase.
Here’s a hypothetical breakdown on a $300,000 mortgage on a $175,000 short sale:
$30,000 Acquisition Price from FDIC via WAMU Seizure
$25,000 Moving Assistance to Seller
$15,000 Closing Costs
$7,000 Forced Place Insurance
$15,000 Carrying Costs
$12,000 Foreclosure Costs (if applicable)
$111,000 TOTAL COSTS
On a $175,000 transaction, a $64,000 profit looks really good. Multiply that number by thousands of old WAMU mortgages in default and it starts to look a whole lot better!
I’m guessing that Chase probably has the seller sign away their legal right to sue Chase in order to get the cash for keys.
Chase is doing the right thing for their immediate and long-term bottom line and for the bottom line of the homeowner by paying $25,000 moving assistance on short sales.