Sacramento Real Estate Views

The Foreclosure Crisis Is Ending

Lenders Now Favor Short Sales

The housing crisis in our region and the rest of the nation is far from over but the market has been shifting from foreclosures to short sales over the last 8 months.  Lenders are now favoring short sales vs. foreclosure as an option for struggling homeowners.

Approval times have shortened and the banks are sending out notices to homeowners letting them know, if they are either in default or behind, that if they would like to sell short the bank will help facilitate that option.

HAMP Fails

The loan modification process has been a complete failure.  Lenders refuse to lower principal loan amounts in favor of modifying interest rates and terms.  The re-default numbers in this program are somewhere in the 60% to 75% range.  Anyone paying attention in the industry knows this to be the case.

Allowing the homeowners to sell short is the option that makes the investor back the most amount of money and helps the homeowner avoid the credit degradation of foreclosure. The HAFA program is designed with this in mind.

Selling short is the best option if the lender will not reduce the principal loan amount.  Lowering principal loan amounts is universally accepted as the only viable solution to keeping people in their homes.

( Incidentally, Bank of America has recently begun a program to reduce principal loan amounts but has only, to date, helped 45,000 or so of their mortgages in default )

It’s In The Numbers

This trend is evidenced by the number of homes for sale in the 3 county area of Placer, Sacramento and El Dorado counties.  As the graph shows, bank owned homes/foreclosed homes now occupy, as of this writing, only 16.9% of the available homes for sale, available short sale homes for sale occupy 29.6% of the market and all others occupying 54.5% of the available homes for sale.

If the banks were still foreclosing, trashing out homes and putting them on the market, we would see that the number of bank owned homes available for sale would be higher than 16.9%.  The percentage of bank owned homes on the market has steadily declined for the last year.

This information is directly from Metrolist Services, Inc., the listing service for Realtors in the region.

Selling Short Could Be The Best Option

If you need to sell your home and you owe more than your home is worth, short sale is the best option.  I’ve heard that short sales are being approved even if the seller barely has a legitimate reason to do so.  With so many mortgages underwater, I guess lenders are beginning to figure out that the stigma of walking away is all but gone and will work with seller’s to get them out of their homes.

This doesn’t come without consequences of course but with the prospect that appreciation in this region has “left the building”, it seems to make smart financial sense to move on, rent and start over when possible.  Click here for an appreciation scenario.

If you’re needing to make this financial decision and would like a confidential meeting to discuss your options with regarding to selling short, please feel free to contact us.  We have a professional negotiation team that handles that short sale process closing a very high percentage of short sales every month.  Fill out the form below and we’ll get back to you as promptly as possible.

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This entry was posted on Saturday, May 8th, 2010 at 9:44 am and is filed under Short Sale Information. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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