According to research from real estate analytics firm CoreLogic, short sales in today’s real estate market have tripled in volume over the past two years and are anticipated to grow by another 25 percent in 2011[1]. The same report indicated that CoreLogic analysts believe that these numbers show that lenders are increasingly considering “short sales as the lesser of two evils when compared to foreclosures…[since] the overall negative financial impact of short sales is typically less than that of foreclosure.” In fact, JPMorgan has opted to offer borrowers with option-arm mortgages – loans with option-payments and adjustable rates – as much as $35,000 to help them into a short sale[2]. It should be noted, however, that while these rates have been reported by multiple sources, JPMorgan representatives have declined to discuss specifics on these incentives although they have verified their existence. Other lenders are offering up to $12,000 in incentives and even pushing the short sale option to their investors when the lender cannot make the decision independently.
Do you think that these numbers indicate a “change of heart” on the part of big lenders?
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[1] http://www.nuwireinvestor.com/articles/banks-now-prefer-short-sales-to-foreclosures-57601.aspx
[2] http://www.thestreet.com/story/11176180/1/mortgages-banks-are-happy-to-modify.html
I am actively buying houses via shorts sales in Florida, and have been quite surprised by the number of banks that are saying yes to my short sale offers. I’ve found that second mortgage holders are more than willing to take huge discounts on their second mortgage paper.
I don’t know Jeff Morelock’s definition of actively buying houses, but I do know I have worked over 130 short sales.
To this very day, short sales have NOT improved – in terms of time to approval or negotiating subordinates liens.
In fact, I’m actively working 8 short sales right now – over 6 months average on each. Two immediately went HAFA and then out of HAFA (rejected????) and now BOA threw one back into HAFA. We call and escalate, call & escalate with no rhyme nor reason…and certainly no progress.
On one other short, a greedy law firm out of Miami got its hands on a $7,000 HOA lien (including many grass cuttings @ $47 /cut) & exploded the lien payoff to $19,988.00. HOA has authorized law firm to foreclose on its lien.
Legally, this continues more and more in Florida where HOAs will foreclose its lien, even with superior liens on the property. HOA will rent out the property or sell to some unsuspecting investor, who’s unaware (?) of superior liens. Eventually, bank (debt owner) will foreclose on its Note. In the meantime, HOA believes it will recover its debt.
Forget negative press for such outrageous practice; this is today’s real estate reality.
Back to point: short sales in Southwest Florida among my front lines’ colleagues and I has NOT – I repeat – not gotten easier or quicker or more conciliatory. I have short sale listings from $39,000 to $1.2MM.
I also have friends who are living rent free for nearly 3 years now.
In my BIG circle of colleagues (including real estate investors) short sales have become MUCH MORE DIFFICULT FOR REAL ESTATE INVESTORS in particular.
Here’s why (in my experience) investors have having a very difficult time:
1. Banks require more stringent arm’s length affidavits – they don’t want a sniff of relationship among any parties privy to the transaction.
2. Banks will not accept option contracts any longer.
3. More and more real estate agent refuse any offer that is NOT traditional.
4. Seasoning requirements.
5. Banks require 3-4 valuations today and are more attuned to attempts to “influence the bpo.”
Last, my friends and I are NOT hearing of any of these “sweetheart” deals with money to property owners, deeds in lieu (in fact, many attorneys are advising their clients NOT to accept deed in lieu for various “gotcha” reasons), cash for keys enticements, etc.
Mike
Sarasota Real Estate agent
Mike,
Please speak for Florida only. I have successfully closed 3 short sales in the last 6 months with different banks in the Atlanta area. Maybe your technique, your offers and/or the bank(s) you’re dealing with are making a difference in getting your deals closed. And yes, you are correct in ASSUMING that it is going to be stringent in some cases, but not in ALL cases.
I am currently working deals with what normally would be or could be a Short sale but in stead it’s a sale to a buyer with suject to clause the loan staying in place deed transfers (“Mortgage Assignment”). There are a lot of people who want to buy a house but can’t get the credit so it’s a win win win win deal. Short Sales are iffy anyway.