A loss mitigation technique rarely heard of when the Tampa
Bay housing market began to crash five
years ago is now one of the major avenues used by banks and servicers to
move their log jams of delinquent mortgages.
After years of trying to figure out the best way to deal with the
Tampa Bay foreclosure crisis, Short Sales have come into prominence as of late.
These types of sales work by keeping foreclosures from going through the entire process
and ending up in the hands of a lender to sell. This process lessens the costs of
resolution, since short sales tend to bring in more money than bank owned sales
do. They also help homeowners who can avoid the black mark on their credit that a
foreclosure causes and even allows them to purchase another home after a 2 to 3 year
wait. Done right, it’s a win-win for both the servicer and consumer.
Newly reported numbers on the use of short sales through the
government-run HAFA program (Home Affordable Foreclosure Alternatives) show
that nearly 40,000 have been accomplished since the programs inception in 2010, and another
40,000 may be done within the space of a year.
Freddie Mac and Fannie Mae are also active users of the short
sale method. Fannie did 80,000 short sales in 2011 and Freddie reported doing over 45,000.
8,222 Short Sales in the Tampa Bay area closed over the last year. They represent 21% of all home sales in the
Tampa real estate market and over two thirds of all properties that are
currently under contract and scheduled to close. The elimination of these properties from the market could help push prices upwards quickly given the low inventory of homes currently available.
RealtyTrac thinks 2012 will be a record year for short
sales as lenders are finally seeing their recoveries increase by $50,000 and
more by using the short sale method instead of REO sales.
Lenders and servicers have found this to be a great
alternative since the Robo-signing debacle slowed efforts to complete foreclosures.
There are other methods that could be used to prevent a foreclosure such as
loan modifications, principal forgiveness, borrower counseling, etc., but Short
Sales seem to have become the preferred approach.
I’ve been saying that the key to the recovery of our market
is pushing Banks to do short sales instead of foreclosing for several years
now. They’ve been slow to come to that realization, but it’s better late than
Tony Delgado-Tampa Bay’s Agent-RE/MAX Bay to Bay-South Tampa