The growing number of short sales and the lengthy foreclosure process is a sign that the U.S. is working through its inventory of distressed properties. Is there really a looming shadow inventory on the REO market? The number of short sales deals have been surpassing the REO deals for the most part, but seminars on real estate investing say otherwise.
While lenders usually require short sellers to demonstrate hardship, such as inability to pay or the need to relocate for work, they don’t always file default notices.
Bank of America
Bank of America reports all short sales including those without a default, completed 10,447 in January — almost double the number reported by other sources — In the first quarter, BOA also had 3,100 deeds in lieu reported where borrowers give-up their properties prior to foreclosure- deed restrictions apply
“Bank of America is placing some emphasis on short sales and deeds-in-lieu as a preferred method to avoid foreclosure. They have been testing a short sale incentive payment program and a deed-in-lieu for rent in some states for several months.”
The company, which cut back on originating mortgages after its 2008 takeover of Countrywide Financial Corp. suited up with more than $40 billion in costs estimates.
Wells Fargo actually surpassed Bank of America in the fourth quarter of last year to become the largest U.S. mortgage servicer because they are originating more home loans in 2009-2012, according to data compiled by Bloomberg.
BOA short-sale activity is consistent with the delinquency and foreclosure statistics, which have been below industry averages
In 2006 and 2007 BOA took an average of 403 days after a notice of default for Bank of America to complete a short sale. That’s more than twice as long as the 193-day average for mortgages controlled by government-sponsored enterprises Fannie and freddieand the FHA.
As part of an effort to expedite the short sales process, mortgage companies will be required to respond to offers on short sales that have government-sponsored programs within 30 days and approve or deny them within 60 days, the FHA announced on April 17. We shall see…
The average U.S. short sale price was $180k in January. Discounts on short sale averaged 17 percent last year despite what the late night infomercials say… Not 60%.
The number of U.S. short sales peaked in the first quarter of 2009 then plunged when President Obama promoted loan-modifications like HARP to help reduce the amount of foreclosures. Short sales will probably exceeded loan modifications as only 25% of those who apply get a modification and only 25% of the 25% are able to keep up with their loan mods.
By Brian Kaley @ www.kjhomefinder.com
