More homeowners turn to short sales
Fannie Mae, Freddie Mac and lenders have made the process easier for borrowers who are willing to give up homes they can no longer afford.
The number of foreclosure sales is on the decline, and that’s partly because the number of short sales is rising.
A short sale is when a homeowner sells a home for less than the mortgage amount, with the consent of the lender, which often forgives the rest of the debt in exchange for the homeowner's cooperation.
A short sale can be easier for the homeowner, who can time his or her move, and for the lender, because the home is usually occupied and kept in good repair until the sale.
Some lenders have even offered homeowners money to do a short sale.
According to RealtyTrac, short sales of properties not in foreclosure made up 22% of home sales in 2012, with the number rising significantly toward the end of the year. That doesn’t include properties in foreclosure that were sold as short sales.
In the last quarter of 2012, short sales made up about a third of transactions, with foreclosures making up only 11% of deals, according to RealtyTrac’s numbers.
"The national mortgage settlement is definitely contributing to the rise in short sales," Daren Blomquist, vice president of RealtyTrac, told Bloomberg. "This report shows there are still a lot of distressed homeowners out there needing to sell."
Short sales that were in the foreclosure process sold for an average of $129,817 less than the mortgage amount, while short sales that were not in foreclosure went for an average of $81,621 less than was owed, according to RealtyTrac’s numbers.
Lenders are also improving their performance on short sales, making it possible for deals to close faster. Fannie Mae and Freddie Mac, which must approve short sales of homes on which they backed the loans, also have made the process easier.
For many homeowners who can’t afford to keep their homes, a short sale is a good solution.
Cesar Rivera bought a home in Phoenix for $290,000 in 2003, but after he lost his job and got a divorce, he had trouble making the payments. He ended up doing a short sale for $220,000. It was "a huge ton of bricks off my back," Rivera told The Wall Street Journal. "I’m just relieved."
Income distribution at its best! taxpayers getting hosed again? ( i paid my FULL morgtage!) these bumbs pay no Federal Income tax? before all u entitled brats complain, the Key word is 'Personal' Federal Income tax;
Sure glad I am not going to be around in 20 yrs; It is not going to be prety when all the rich peoples money runs out?? (pescos % dollars of the 90's anyone?) gonna be a rough ride for all U spoiled bratrs; it is called REALITY! ha;
...why are we subsidizing people who enter a legal contact and then don't honor it.....
Can I get a short-sale on stock that I bought two years ago??
Yeah, I paid $100 per share and have 2000 shares- I paid $200,000 for the shares....they are now worth $89,000. Can Obama cover me for the loss of $111,000 like he is for millions of home owners??
You have hit the nail squarely on the head. Collusion is rampant between banks and realators. I find it odd that a broker will not return a phone call when I am calling to put an offer in on a house. A cash offer with the earnest money equal to the full asking price of the house!!!!!!
Class action suit anyone?
listings agents and banks are releasing short sales to only their freinds and family. I have called on several short sale properties now and the listing agent says that the bank is not responding, or it is already under contract when it is does not show under contract online and neither has under contract board up on the house. Listing agents are refusing to even take an offer on the home. This has consistently happened with on last 4 short sale/foreclosed properties that i saw. I am making a list and will check the final sale price and probably sue them later for not taking my bid which could have been higher. Since, no real seller has vested interest in these properties, it is for that reason bank officials and listing agents are scamming on these properties and selling for so less compared to maket rate. This needs to be investigated and procedures setup, otherwise mortgage holders are going to loose a lot on this.
I am not in a financial position to keep the property.