Welcome to the Team366 Associates at Real Estate One Blog. We are constantly adding new content so so that our followers and clients can stay up-to-speed on our the market and our community. We love comments so feel free to leave them. We don’t claim to know-it-all and we believe that the best information rises to the top through collaboration.
Enjoy our blog!
-Eric Pointer
According to an article by Jon Prior for Housing Wire, some lenders have been turning to short sales as foreclosures are delayed due to documentation slow downs. With lenders having to show more documentation to proceed with foreclosures, it is slowing down the foreclosure process and having lenders looking for alternatives that are faster and save them money like short sales. If this is true, it would be a welcome development in the market as lenders have favored foreclosures over short sales in my experience. The article states that short sales accounted for 8% of all liquidations by lenders in August 2009. By the middle of 2011, that percentage had grown to 25% of all lender liquidations of nonperforming loans. At the same time, the time it took a borrower to default and a property to become a bank owned property grew from an average of 14 months in 2009 to 24 months by the summer of 2011. As the delay in foreclosure time grew, the lender lost more money and the loss severity grew. As a result, short sales have become more popular by some lenders because they save both time and money.
Not only do short sales save both time and money compared to a foreclosure but they are also helping the lenders reduce the number of bank owned properties that are just sitting waiting to be sold. This inventory of unsold, bank owned homes has been called the “shadow inventory” and short sales have helped reduce the number of these properties. The average bank owned property took 17 months to sell compared with 12 months for short sales. Further, the loss severity on a bank owned property is 70% compared to 60% for short sales. Short sales are also better for the borrowers credit than a foreclosure. A short sale might drop the average FICO score between 50-200 points with a foreclosure dropping a FICO score by as much as 400 points. In addition, borrowers can typically buy a new home within 1 to 2 years after a short sale compared with 5 to 7 years after a foreclosure.
Even though a short sale is better for the lender and borrower, they are still difficult to get accepted as lenders have sold many of these loans to different investors and these different parties have to agree to the terms of the deal. It is my hope that lenders find a way to approve more short sales for everyone’s benefit.
Short Sales: Search
Search for short sales here.
According to the July Mortgage Bankers Association’s Economic Forecast, there were three pieces of encouraging news for the national housing market.
1. Detroit was ranked number 14 on Fortune Magazine’s list “100 Great Things About America.” The reason for the high ranking is they look forward to Detroit’s rise again from recent troubles.
The Townie Street Party is a FREE kick off party and optional fundraiser for the 2011 Ann Arbor Art Fair. The Townie Street Party is on Monday, July 18th from 5-9:30 p.m. on Washington between Thayer and Fletcher.