"This past month we participated in the Mortgage Bankers National Servicing
show, where most of the leading bank servicers were in attendance. Here is some
insight through the first two months of 2009.
A National Perspective:
Distressed Properties
A study of the top 26 foreclosure markets revealed
that foreclosure inventories are equal to 77 percent of MLS listings. In "bubble
markets" with volatile prices, foreclosure inventories represent up to 89% of
listings. Looking at the same 26 markets its estimated that foreclosure
inventories alone represent between a 14.4 and 34.7-month supply of housing. The
National Association of Realtors estimates that foreclosure and short sales
represented 45 percent of existing-home transactions during the fourth quarter.
As a result of the current economic climate, all indications are that its going
to take a long time for this discounted inventory to clear, even with
foreclosures representing a growing percentage of transactions.
Scoring
Foreclosure Property Deals: Short sales are a new trend
As foreclosure
inventory continues to grow, banks are becoming more and more interested in
pursuing short sales. The largest banks and thrifts are substantially increasing
their short sale activity. From Q3 2008 to Q4 2008 short sale transactions were
up 61 percent. We are seeing short-sale property discounts ranging from 10
percent to 20 percent. Clearly, lenders want to recover as much of the mortgage
amount as possible, but selling at a discount in this range typically still
saves them money versus letting the home fall into foreclosure.
Insights
from the Mortgage Bankers National Servicing Show
It was clear at the
show that most servicers are expecting a significant influx of REOs in Q2 and
Q3 as moratoriums begin to lift. With the large inventory levels, asset managers
are applauding REO agents that are using any differentiating approach toward
actively marketing their REO listings. We are seeing that loan modifications
programs are rapidly expanding. Banks are proactively looking at their default
portfolios and segregating loans into those that qualify for a loan
modification, those that are likely candidates for short sale and those where
foreclosure appears to be the only course of action for recovery. With this new shift, asset managers are expanding
their business by getting into the business of processing short sales. We
expect that this will bring new efficiency to the short sale process and likely
a reduction in the typical length of time it takes to close these transactions."
http://www.charlotterealestateforeclosures.com/004AF7
