When I first read this article "Getting Cash in Exchange for a Short Sale"http://bucks.blogs.nytimes.com/2011/09/22/getting-cash-in-exchange-for-a-short-sale/ by Ann Carrns I could hardly believe my eyes. Upon first read, it seems like a dream for underwater homeowners. However, this article seems to focus on California where it is my understanding that a first mortgage holder does not have recourse against a borrower on a principle residence for any deficiency on the note if the borrower defaults. In California, it appears that the only hope the Lender has of recapturing its equity is to take back the property in good condition for resale or get it to a short sale buyer. Since home values appear to still be dropping in most of the Nation, I will assume the Lender would like those options to happen sooner rather than later.
This is not the case in recourse states, such as Michigan, where the Lender may take the borrower to court to recapture some or all of its losses. In Michigan, I have not seen any Lenders offering cash to borrowers beyond the token "cash for keys" $3,000 to move out or as an incentive for a short sale or a deed in lieu of foreclosure. I would like to hear from others who negotiate short sales on behalf of borrowers. Please comment if you have seen any activity that would indicate Lenders are more willing to participate in Short Sales or Deeds in Lieu of Foreclosure.
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