Lenders start to accept short sales
WASHINGTON – Jan. 2, 2012 – Lenders are more open to short sales as a way to help struggling homeowners avoid foreclosure, according to a recent MSNBC.com article.
“Foreclosure sales are pretty devastating,” says Faith Schwartz, executive director of Hope Now, a resource for cash-strapped homeowners. “We’d much prefer a (loan) modification, but if (homeowners) don’t quality, then the next best alternative is deed-in-lieu (of foreclosure) or short sales.”
Short sales and foreclosures increased in 2010, but in 2011, short sales continued to climb (increasing 26,000 nationwide) while foreclosures dropped by 255,000, according to Hope Now data.
Some banks started to realize that a short sale is preferable to a foreclosure in most cases. For one, banks tend to make more money off of a short sale vs. foreclosure: The average price of a foreclosed home in the second quarter of 2011 was $164,217 compared to $192,129 for a short sale. Also, foreclosures tend to cost more in legal and administrative resources.
Neighborhoods also tend to benefit more from a short sale than a foreclosure because short sales tend to sell for less of a discount. And, unlike a foreclosure, short-sale homes don’t often sit vacant, which makes them prime targets for vandalism and depresses nearby property values, housing experts say.
Source: “Increase in Short Sales Give Market a Little Breathing Room,” MSNBC.com (Dec. 29. 2011)
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