RealtyTrac: Growth spurt for short sales in 2012
The national housing market shows favorable conditions for short sales in 2012, says RealtyTrac.
According to a recent report, pre-foreclosure sales, which are typically short sales, showed a 33% increase in January over year-ago figures in 32 states. These states included Georgia, with a notably high 113% increase, Michigan (90%), Wisconsin (77%), California (52%), Texas (48%), Arizona (44%), Nevada (36%) and Florida (20%).
Twelve states, including Arizona, California and Florida, had more short sales than REO sales for the month of January.
The rise in short sales might be a factor in the number of foreclosures falling to 2007 fourth-quarter levels.
More “aggressive” pricing for short sales might be evidence of a different outlook that lenders now have, the report said.
Pre-foreclosure prices in January 2012 averaged $174,120, 4% cheaper than last quarter, and 10% cheaper from the previous year.
“Short sales have long held great promise as a market-based solution to the nation’s foreclosure problem, but short sales transactions over the past three years have actually declined after peaking in the first quarter of 2009,” said Daren Blomquist, vice president of RealtyTrac. “January foreclosure sales numbers, along with first-quarter foreclosure activity, strongly indicate that downward trend is ending, and we believe 2012 could be a record year for short sales.”
More than 100,000 homes began the foreclosure process in March — a number that hasn’t been matched since November 2011.
Even more telling, this number of foreclosure starts climbed up 7% from February, making March the third consecutive month for increasing foreclosures.
The new wave of foreclosures should result in more short sales from nearly 3.5 million delinquent loans and, even more so, from some of the estimated 13 million underwater mortgages, according to the report.
Short sales have been a popular topic in recent years, and in recent days.
Fannie Mae and Freddie Mac said Tuesday they will require mortgage servicers to make decisions on short sales under new timelines beginning in June.
Servicers must review and respond to a borrower within 30 days of receiving all documentation. According to guidance released earlier this week, the servicer can take up to 60 days on a decision if negotiations with mortgage insurers or other stakeholders linger.
Short sales have in the past taken several months to complete as servicers, borrowers, buyers, investors and different lien holders had to agree on a transaction.
Mortgage servicers working with the goverment-sponsored enterprises completed a record 32,000 short sales in the fourth quarter, up 14% from the previous quarter, according to agency data.