Lenders boost South Florida short sales by 49% in 2010
Short sales in South Florida increased by 49% in 2010 from the year before, a sign that lenders could finally be moving focus toward the alternative to foreclosure. A report from CondoVultures, a real estate consultant firm based in the area, showed buyers purchased 16,800 properties in Miami-Dade, Broward and Palm Beach counties through a short sale in 2010. That's up 49% from the 11,300 completed in 2009. "All indications are that short sales will increasingly be the primary focus of buyers searching for properties in the South Florida market," Hernan Osorio, director of sales for CVR Realty, said. Osorio added the Home Affordable Modification Program is not having the effect the government first thought, and lenders are beginning to move toward short sales, which is good for sellers who want out of the home but want to protect their credit scores as much as possible. But the Treasury Department's short sale initiative, the Home Affordable Foreclosure Alternatives program, is not proving to be the answer. According to the Congressional Oversight Panel, which oversees these housing programs, the Treasury has spent only $4.3 million through the program, resulting in roughly 661 short sales through HAFA. This means lenders are turning to their own programs. Data from Florida Realtors shows lenders are still anxious to unload larger quantities of REO. There were 19,800 sold in 2010, down 6% from the year before. Before the housing crash, a typical foreclosure took six months and cost about $40,000 in unpaid taxes, damage, court and attorney fees. But as foreclosures began piling up in Florida, the state's supreme court installed a mediation program that stretched timelines out as far as 18 months, costing lenders roughly $100,000 per property. Fitch Ratings said in December that higher loss severities on foreclosures would push lenders to initiate more short sales in 2011. "In the end, bank-owned properties offered on the open market generate a lower average price than properties that are sold as short sales," CondoVulture said in its report. The problem with short sales has always been time. The transactions require a lot of decisions from a lot of parties including servicers, banks, sellers, buyers, investors and any second-lien holders. CondoVultures said the average short sale in South Florida took 195 days in 2010, down from 203 days in 2009. "Lenders have reduced the short sale approval time," Osorio said. "It is still not quick but it is faster. We expect the average amount of time necessary for a short sale to transact to get short and shorter as the lenders embrace the approach." Write to Jon Prior.