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Short Sale Relocation Assistance and Incentives

Receive money from your lender when the short sale closes!

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Can I Receive Relocation Assistance for a Short Sale?

We are asked this question all of the time and it's true... You can get paid money to short sale your home.

When you complete a short sale on your home, you will not receive any proceeds from the actual sale of your home. In a short sale, all of the proceeds are used to settle your mortgage, and any other liens you might have against the property. (The remainder of the balance owed to the lien holders/banks is forgiven.)

The good news is that there is still a way that you can walk away with money at the end. There are many incentive programs, funding by the government and by the lenders, that pay you a cash incentive (relocations assistance) a

When negotiating a short sale, we always apply for all available relocation assistance and have been successful at obtaining over $8,000,000 in payments for our clients. In today’s market, the average compensation received ranges from $1,500 up to $10,000, depending on the type of loan you have and the investor that owns it.

You may have heard of larger incentives being received, which was the case during the last market crash. The most common program was the Home Affordable Foreclosure Alternatives Program (HAFA). HAFA offered incentives of up to $40,000 during its peak, but the program expired at the end of 2016 as the short sale and foreclosure market slowed down, and there have been no current attempts by the government to renew it.

There are various short sale incentive programs that are available to you.

Contact us today at 619-777-6716 or click below to learn more about the programs and find out how much you may be eligible to receive.
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Private Investor & Big Bank Short Sales

Most private investors and big banks still have their own short sale incentive programs in place, and they are typically the most bountiful. The amount of relocation assistance typically ranges from $1,500 - $10,000. (This amount does fluctuate depending on the status of the economy. We have received relocation payments as high as $40,000 for our clients.)

FHA Short Sales

The Federal Housing Administration (FHA) is part of the Department of Housing and Urban Development (HUD). The FHA Pre-foreclosure Sale Program is for mortgages that are insured through FHA.

FHA was originally offering up to $1,000 to homeowners upon completion of their short sale. In 2013 they updated their process and raised the amount to $3,000. A stipulation is the seller must be the owner-occupant of the home.

VA Short Sales (VA Compromise Sales)

For a VA guaranteed loan, a short sale is also known as a VA Loan Compromise Sale. The VA is authorizing $1,500 in relocation assistance to borrowers who complete a short sale with a VA compromise claim. A stipulation is the seller must be the owner-occupant of the home.

Fannie Mae and Freddie Mac Short Sales

The Federal Housing and Finance Agency (FHFA) announced new guidelines, which took effect as of November 2012. Their new “standard short sale” program is similar to HAFA and replaced their involvement in HAFA. It applies to mortgage loans where the investors are Fannie Mae (FNMA) and Freddie Mac (FHLMC).

Through this incentive program, Freddie Mac and Fannie Mae will offer the seller up to $3,000 in relocation costs upon the successful closing of the short sale.

FHA Short Sales

The Federal Housing Administration (FHA) is part of the Department of Housing and Urban Development (HUD). The FHA Pre-foreclosure Sale Program is for mortgages that are insured through FHA.

FHA was originally offering up to $1,000 to homeowners upon completion of their short sale. In 2013 they updated their process and raised the amount to $3,000. A stipulation is the seller must be the owner-occupant of the home.

Frequently Asked Questions

Why would a lender pay me to short sale my home when they are already taking a loss?

In most cases, it is going to be less expensive for a lender to allow you to short sale your home than it is for them to spend the time and money foreclosing. By offering cash incentives at the end of a short sale, it helps increase the number of short sales completed and in turn, saves them money.

Is Relocation Assistance Money Taxable?

Yes. If you received relocations assistance or “cash for keys” from the lender, you can expect to pay taxes on that amount. The lender will send you a 1099-Misc for the payment.

According to the Internal Revenue Service, “Cash for Keys Program income (Relocation Assitance), which is taxable, is income from a financial institution, offered to taxpayers to expedite the foreclosure process. Report this as ‘other income’ on Form 1040, line 21. The taxpayer should receive Form 1099-MISC with the income in box 3.”

I Received Relocation Assistance From The Short Sale Lender, But I Did Not Receive A 1099-misc. How Should I Proceed?

If you received relocation assistance but didn’t receive a 1099-MISC, there is a good chance that the short sale lender doesn’t have a record of your new address. You should speak with a CPA about how to proceed in this situation. Typically, you will still treat it the same as if you had received the 1099 and report it as income on your tax return.

How Do I Receive my Relocation Assistance Payment After the Short Sale?

You will receive your payment from the escrow company after the transaction closes. All relocation assistance money is documented on the final settlement statement (also called a HUD-1) and payable to the seller upon the successful closing.