Foreclosure Deals Drop as Banks Approve More Short SalesPrashant Gopal
Short sales of U.S. homes, where the price is less than the amount owed, outnumbered foreclosure deals in the fourth quarter as lenders accelerated efforts to dispose of troubled properties, according to RealtyTrac.
Short sales totaled 337,000, RealtyTrac estimated, up 14 percent from a year earlier and accounting for about a third of all residential transactions in the quarter. Sales of bank-owned homes fell 11 percent to 112,802 and made up 11 percent of deals, the Irvine, California-based data firm said today.
The largest U.S. banks have stepped up short sales as part of a $25 billion settlement they reached last year with state attorneys general over allegations of mishandled foreclosures. New legislation in California, Washington and Nevada that makes it more difficult to seize homes also encouraged lenders to approve foreclosure alternatives, said Daren Blomquist, vice president of RealtyTrac.
“The national mortgage settlement is definitely contributing to the rise in short sales,” Blomquist said in a telephone interview. “This report shows there are still a lot of distressed homeowners out there needing to sell.”
Mortgages that were more than 90 days late fell in the fourth quarter to the lowest level since 2008 as employment improved and rising home prices helped struggling borrowers sell without losing money, according to a Mortgage Bankers Association report on Feb. 21. The share of loans in foreclosure fell to 3.74 percent from 4.07 percent the previous quarter, the biggest drop in the association’s records.
The S&P/Case-Shiller index of home prices in 20 U.S. cities rose 6.8 percent in the 12 months through December. It was the biggest increase since July 2006, the group said this week.
Short sales of homes in some stage of foreclosure took an average of 336 days to sell in the fourth quarter, up from 308 days a year earlier, RealtyTrac said. The average sale price was $190,031, up 2 percent from the fourth quarter of 2011.
Short sales of homes that weren’t in the foreclosure process increased 17 percent in the fourth quarter from a year earlier, RealtyTrac said. A rule change in November made it easier for non-delinquent borrowers with loans backed by Fannie Mae and Freddie Mac to sell properties for less than they owe, Blomquist said.
A total of 219,084 properties in foreclosure or bank-owned sold nationwide, down 10 percent from the third quarter and 1 percent from a year earlier, according to RealtyTrac.