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Short Sales May Replace REO Sales as the Foreclosure Crisis Drags On

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Foreclosure Crisis

Will the Foreclosure Freeze Boost Short Sale Activity?

The use of short sales will get a boost now that many servicers cannot move ahead with foreclosure sales, according to Travis Olsen, a short sale vendor.

Under pressure from regulators, state attorneys general, and the courts to review and fix their foreclosure procedures, banks and their servicers have suspended foreclosure sales.

Short sales do not need court approval. This foreclosure alternative allows borrowers to sell their homes and walk away from their mortgage debt free — that is, if the bank agrees to the sale price.

The use of short sales has been increasing for the past year. In some hard-hit markets, short sale properties outnumber foreclosure or REO sales by a 4 to 1 ratio.

“Short sales are really taking over,” said Olsen, the chief operating officer of Loan Resolution Corp. in Scottsdale, Ariz.

Banks and servicers outsource short sales to LRC when it’s clear the property is headed for a foreclosure sale. They also set a deadline for completing the short sale. But now they cannot finalize a foreclosure. “That gives the borrower more time to short sale the property,” said Olsen.

With the foreclosure crisis worsening, the company is seeing servicers take a proactive approach to short sales. Some servicers are even offering short sales to borrowers who were denied a loan modification.

Original article posted here.

So how about it? Are you guys seeing an uptick in short sales activity? Do the “robo-signing” banks seem more open to short sales now? LEAVE A COMMENT BELOW.

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  • glor mart

    PNC mortgage has made an error on my loan modification and included a previous foreclosed property in my debt ratio. They refuse to review it, say I can’t afford it and are determined to proceed with the final sale in 2 days!!! Any advice???

  • maurice

    would properties in for a short sale transaction be re-appraised & allow current owner to buy back his own property–would that not be the same thing? am I missing the point of a short sale? Does that not cut all the B/S out & life goes on……

  • Johnny B. GOOD

    Modification dosen’t work for everyone, i got five more years added onto my loan plus payments are higher and it was converted into a interst only loan don’t let the loan company or bank do your mod.

  • Johnny B. GOOD

    My house has no meaning to me anymore

  • David

    File for bankruptcy. That will delay the sheriff’s sale. You don’t have to complete the bankruptcy, just file for it.

  • Doc

    Glor – Ask a Board-Certified Real Estate Attorney to file a Temporary Restraining Order for you, to delay the foreclosure sale. What’s going to eventually come out is that the Banks are knee deep in fraud at every level. They are hoping, no praying that they won’t have to face juries regarding their conduct. (Can you imagine selecting a jury for that trial?) Sorry to say, that may not be soon enough to help you. If you can delay the foreclosure sale long enough to get Short Sale approval, that may at least help you to avoid a foreclosure on your record.

    Johnny – Short Sales have to be Arm’s Length which excludes past or present owners or anyone related to them.

  • Pingback: LOAN MOD UPDATE:l INVESTMENT PROPERTY MODS A WASTE OF TIME!

  • maurice

    would like the big boss from the bank answer my question;

    maurice on October 26, 2010 at 5:40 am

    would properties in for a short sale transaction be re-appraised & allow current owner to buy back his own property–would that not be the same thing? am I missing the point of a short sale? Does that not cut all the B/S out & life goes on…..

    maybe the CEO does not have logic sense & needs to come down to earth, be realistic, most banks are almost solely responsible for this cock up;
    again;
    WHY ARE U PASSING THE HOUSE TO SOMEONE ELSE & NOW DISRUPTING FAMILIES & COMMUNITIES & NEIGHBOURHOODS. U guys at the bank are the ones in cahoots with the Obama socialistic government who started these short sales. U have started changing the behaviour of homeowners, so now u are in deep sh…. so RE-APPRAISE HOMES & OFFER TO HOMEOWNER..USE THE BAILOUT MONEY WE MIDDLE CLASS HAVE GIVEN U …

  • Devongooden

    The only short sale I intend to do isthe one in which I am selling the house myself. I don’t see how it profits me for the bank to pay an agent to sell my house and I walk away empty handed. Give me a year to sell at a fair market price. If I can sell and make a profit fine. No agent or anyone is going to intrude on my family in order to short sell my house and I walk away empty pocket.
    Forclosure to me is a better deal. Forclosure or short sale, your credit will be in the pits anyway.

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