CHICAGO – Oct. 21, 2011 – Are short sales getting easier? Some homeowners are reporting that banks are now not only more willing to consider a short sale, but are even offering incentives to complete a short sale. For example, a homeowner in Chicago says his lender approved his short sale and then gave him a $20,000 check after the deal was finalized for selling the home as a short sale instead of letting it sink into foreclosure.
Lenders accepting a lower mortgage payoff from an underwater seller traditionally isn’t thought of an easy transaction to complete. Lenders weren’t so willing a few years ago. But as the number of Americans underwater on their mortgages grow, more lenders are reconsidering as they try to avoid the extra costs incurred to their bottom-lines that a foreclosure can cause.
For 2011, short sales accounted for about 8 percent of total home sales, and rose 7 percent over 2010 totals, according to CoreLogic data. Short sales are up by 59 percent year-over-year in Illinois, 32 percent in Michigan, and 19 percent in Arizona alone, according to CoreLogic.
“We’re starting to see that servicers and lenders are viewing short sales as a better alternative than they had in the past,” says Daren Blomquist, spokesman for RealtyTrac. “Some of that relates to the fact that it’s getting harder to foreclose. There are additional requirements in terms of paperwork and requirements that states and judges are imposing.”
Short sales can still be complex and lengthy – they can take up to nine months to close and even after that, there’s no guarantee it’ll end successfully. “In general, it is a totally different type of transaction,” says Mike Cuevas, a real estate professional at Exit Realty in Chicago. “You’re not only selling a house, you’re negotiating debt.”
Source: “Why it can Pay to try a Short Sale; Lenders may be Viewing Short Sales as a Better Alternative,” MarketWatch (Oct. 20, 2011)