Mortgage foreclosure statistics of late are showing that the persistently upward trend seems to be waning, which is good news indeed. However, it is only part of the whole real estate picture. The economy remains weak and the stubbornly high unemployment level continues to worry many housing observers, suggesting that homeowners would still be vulnerable. So, how is it that home loan foreclosures are losing steam?
The answer to that interesting question appears to be that mortgage lenders are adjusting strategy to favor short sales over mortgage foreclosures. Campbell/ Inside Mortgage Finance survey just concluded supports that theory. It says that in January nationwide short sales added up to 15.9% of all home purchases while move-in-condition REOs - or real estate owned - clocked in at 13.8% and wrecked REOs held a 13.4% share of the housing market. As recently as in November of 2009 these same categories rode along neck and neck at around 12%. Clearly there is a shift.
First-time home buyers generally favor short sales, as they can still acquire property at low prices and get approved for affordable mortgage money, going either FHA or conventional. Although the short sale process can be agonizingly slow, a first-timer often is willing to put up with that, so long as it is a juicy deal. Why not? Anyway, that's their playground. They are often outmuscled from the REO arena by investors who usually show up with a fistful of dollars, paying cash in other words, and can close pronto. Mortgage banks, like all sellers, tend to give the cash buyer the inside track, to no one's surprise.
Southern Nevada - including communities like North Las Vegas, Silverstone Ranch, Anthem, Rhodes Ranch, Mountains Edge, Mesquite and Pahrump - property owners are certainly toasting the gradual change working its way into the distressed mortgage realm. Las Vegas does have its share of them already in the pipeline and many more to be entered in the coming months. Short sale is easier on the credit report, FICO really, damage than a foreclosure is and can also relieve the homeowner from a deficiency judgment, although to be safe the home loan provider should be asked to put that in writing in great bold letters.
Short sales becoming a more popular avenue for mortgage providers in dealing with distressed borrowers will help solve the overall housing collapse. Give it some lift. It won't be a cure-all, though. It's just one part of the whole, but a positive one at that.