Short sales show steady growth

National bank and thrift servicers completed 22 percent more short sales during the quarter ending Sept. 30 than during the previous three months, and 127 percent more than the same quarter a year ago, federal bank regulators said today.

In a report tracking about 65 percent of outstanding U.S. mortgages, the Office of the Comptroller of the Currency (OCC) and Office of Thrift Supervision (OTS) said lenders under their jurisdiction completed 30,766 short sales and 118,603 foreclosure sales during the third quarter.

That's a ratio of 3.85 foreclosures for every short sale, compared with 9.43 a year ago, suggesting an increased emphasis on short sales as an alternative to foreclosure.

Real estate brokers and agents often complain that lenders miss opportunities to approve short sales that would ultimately result in smaller losses than foreclosing on a home and selling it at an even greater discount.

This month a Congressional Oversight Panel issued a report concluding that the Obama administration's Home Affordable Modification Program (HAMP) is on track to prevent only a fraction of a projected 8 million to 13 million foreclosures anticipated in the next four or more years. Many, if not most, HAMP loan modifications are expected to redefault (see story).

The Obama administration on Nov. 30 released guidelines for a program that provides incentives for loan servicers and homeowners to engage in short sales when borrowers eligible for HAMP don't qualify for a loan modification (see story). ...CONTINUED

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