Yes, Ed, something is up.
There is a Bloomberg story today detailing how banks appear to have shifted policies and are, in some cases, taking the initiative to move delinquent loans off their books. Of course, the mentioned BofA pilot program does not affect Colorado. But there is more. There has been an acknowledgement that losses are mitigated with short sales and the banks may not stand on firm legal ground with respect to some mortgages - which has been thoroughly reported by the media. Take a look.
From the story:
"Bank of America Corp. sent letters to 20,000 Florida homeowners as part of a pilot program, offering incentives of as much as $20,000, or 5 percent of the unpaid loan balance, Jumana Bauwens, a spokeswoman, said in an e-mail. The program expired in December and the Charlotte, North Carolina-based bank hasnâ€™t decided whether to introduce it in other states, she said. About 15 percent of the homeowners agreed to participate in the program, she said."
From the story:
"Offering enough for the homeowner to put down a deposit on a rental apartment is reasonable, said Sean Oâ€™Toole, chief executive officer of ForeclosureRadar.com, which tracks sales of foreclosed properties. Giving tens of thousands of dollars to delinquent homeowners sends the wrong message, particularly if they got into trouble by running up home-equity loans during the housing boom, he said.
'It may make sense for people to walk away, it doesnâ€™t make sense for them to get rewarded for doing it,' Oâ€™Toole said. â€œItâ€™s not the homeownerâ€™s fault that house prices dropped so dramatically, but they have already received months of free rent, if not cash out.â€
Cecala of Inside Mortgage Finance said he wonders whether lenders are making big payments on properties with underlying title problems. Evan Berlin, managing partner of Berlin Patten, a real estate law firm in Sarasota, Florida, said representatives of a large bank told him the incentives are primarily given to borrowers when it doesnâ€™t have the proper paperwork needed to win its foreclosure case. He declined to name the bank for publication."