The flow of that foreclosure pipeline just might get some help from a few leaks along the way.
Mark Fleming, CoreLogic (CLGX) chief economist, said a leveling off of completed foreclosures suggests the remaining inventory could take longer to process. Complete foreclosures dropped to 65,000 in February, despite 1.4 million more mortgages in the foreclosure process, according to the data firm.
That, of course, weighs on the rest of the housing market. But as more look to resolve delinquent loans outside the foreclosure process — through short sales, deed-in-lieu deals and loan modifications — those numbers won’t show up in the data, Fleming said.
“If we resolve the foreclosure without actually completing the foreclosure, that’s going to be good for the housing market down the road,” Fleming said Monday at a SourceMedia mortgage servicing conference in Dallas-Fort Worth.
Despite the popularity of short sales, they make up a relatively small share of the market, Fleming said. They account for roughly half of all distressed sales, which make up 27% of housing transactions.
CoreLogic's models suggest, however, that short sales lead to smaller losses on properties, Fleming said.
“It’s certainly a growing segment … but it’s still not the dominant form,” he said.
— Andrew Scoggin