More Short Sales Than Foreclosure Sales in PBC

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Short sales outnumbering foreclosure sales is good news for buyers and sellers alike.-Stefan

 

Posted: 7:00 a.m. Tuesday, Sept. 4, 2012

 

Lenders Allow More Short Sales; Foreclosure Sales Down in Palm Beach County

By Kimberly Miller

Palm Beach Post Staff Writer

WEST PALM BEACH —

The number of homes purchased in a short sale surpassed foreclosure buys in Palm Beach County during the first half of the year, more evidence banks are avoiding lengthy court proceedings and trying to comply with the Nationwide Mortgage Settlement, experts said.

Between January and the end of June, 3,489 short sales closed in Palm Beach County, 678 more than the number of bank-owned homes sold to third-party buyers and a 17 percent increase from short sales completed in the first half of last year.

The data, from the Irvine, Calif.-based RealtyTrac, also noted a 21 percent decrease in the number of bank-owned homes sold during the first half of 2012 from the same time in 2011.

Florida was one of 13 states where short sales outnumbered foreclosures sales during the second quarter of this year, according to a RealtyTrac report released last week.

The report defines short sales as homes where a foreclosure has been filed but the bank agrees to sell for less than what the homeowner owes on the mortgage before the foreclosure is complete. A bank-owned sale is conducted after the home is repossessed in a foreclosure proceeding.

The short sale increase is good for homeowners trying to get out from their underwater mortgages, said Gia Freer, a Realtor with Palm Beach Premier Real Estate in Boca Raton.

Some of her clients are getting hefty cash incentives from banks to execute a short sale. It’s also generally considered less of a ding to credit scores and is a speedier process than in the early years of the housing bust.

“When all of this started happening, a lot of the banks didn’t have any guidelines, they didn’t know one end of a short sale from another,” Freer said. “With GMAC, we recently got a sale approved and closed in 45 days.”

Lenders have their own incentive to allow short sales with the February approval of the National Mortgage Settlement between the nation’s five largest banks and 49 state attorneys general.

To atone for years of foreclosure-related offenses, the lenders agreed to provide $25 billion in cash and mortgage relief to homeowners. Some of that relief is in the form of short sales and deficiency waivers that allow the homeowner to walk away without having to make up the difference between what is owed on the mortgage and a home’s sale price.

According to a report released last week, the five banks approved 13,000 Florida short sales between March 1 and June 30, saving borrowers $1.47 billion.

Nationwide, 74,614 short sales closed during the same time period, saving borrowers $8.6 billion.

“I think loan servicers have seen the writing on the wall for a while and now the National Mortgage Settlement has made it official,” said RealtyTrac spokesman Daren Blomquist.

Another trend RealtyTrac found nationally was a jump in the number of short sales approved before a foreclosure had been filed against the home. In the first five months of this year, there was an 18 percent increase in those sales from the same time in 2011.

“It’s another sign that banks are more aggressively attacking these properties early on in the process rather than waiting until a foreclosure is filed,” Blomquist said.

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