The suspension of foreclosures by GMAC Mortgage, JPMorgan Chase, Bank of America, PNC Financial Services Group, Goldman Sach’s Litton Loan Servicing and other large lenders that may follow suit could further rev up short sales.
As lenders see deeper foreclosure problems, it’s likely they’d give more attention to short sale proposals and be more receptive to purchase offers they previously ignored.
Additionally, the recent meeting held between the leaders of the National Association of Realtors and representatives from Wells Fargo and Bank of America to facilitate short sales resulted in assurances by the lenders that they will be more transparent with their short sale processes. Wells Fargo has posted its short sale guidelines on the NAR website while BofA launched a new website to publish information on its short sale processing.
Realtors are saying they’ve observed that banks have become more responsive, particularly Chase and BofA. In some cases, they’re now calling back realtors within days.
In the second quarter, short sales rose by 26 percent from 23,379 units in the first quarter to 29,375 units, based on data from the U.S. Federal Housing Finance Agency. Compared to the second quarter last year, the increase was a staggering 250 percent, showing the reality that short sales are increasingly being embraced by distressed homeowners as the best option to avoid foreclosure or solve negative equity pressures.
In Florida, short sales made up 20 percent of all home purchases in the state in the second quarter, higher than the national share of short sales, which was 9.5 percent, based on figures from RealtyTrac. The percentage was even higher in Saint Lucie County, where short sales accounted for one-fourth of all home purchases.
In South Florida’s tri-county region of Palm Beach, Broward and Miami-Dade, short sales have surpassed foreclosures, making up 57 percent of total distressed sales in the region in the second quarter. Moreover, short sales shot up by almost 46 percent compared to last year’s second quarter and surged by 14 percent compared to the previous quarter.
With the foreclosure moratoriums getting wider in scope, precipitated by BofA’s announcement of suspending foreclosures in all 50 states and GMAC’s decision to review foreclosures in all 50 states, the possibilities of foreclosure sales falling further have become greater. For buyers, foreclosure homes have become too risky, particularly the newly-foreclosed ones.
As a consequence, short sales have become a much better buy for homebuyers and investors. In a short sale deal, there’s no risk of a property being taken back from the buyer as both the homeowner and the lender are voluntarily pursuing the sale.