Tags: Foreclosure | Homes | Rise | Purchases

Foreclosure Homes Rise to 24% of Purchases as Short Sales Jump

Thursday, 01 March 2012 09:45 AM

U.S. homes in or nearing foreclosure accounted for almost a fourth of residential purchases in the last three months of 2011 as lenders approved more short sales, where the price is less than the amount owed.

Deals for bank-owned and distressed properties rose to 24 percent of total home sales from 20 percent in the third quarter, according to RealtyTrac Inc. The transactions fell from 26 percent a year earlier, the Irvine, California-based data seller said today in a statement.

“We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales,” Chief Executive Officer Bandon Moore said in the statement.

Banks may “aggressively” resume unloading distressed property after an 18-month delay brought on by federal and state legal probes into flawed foreclosure paperwork and documentation, Moore said. The fourth quarter showed lenders turning to short sales as a “better option” than holding a house whose borrower doesn’t make any payments, he said.

The number of short sales jumped 15 percent from the fourth quarter of 2010 while purchases of bank-owned houses fell 12 percent, according to RealtyTrac. Pre-foreclosure deals outnumbered bank-owned sales in the “bellwether” cities of Los Angeles, Miami and Phoenix, Moore said.

“That trend will likely show up in more local markets in 2012,” he said.

A total of 88,303 pre-foreclosure properties sold in the fourth quarter, making up 10 percent of all transactions.

Bank Settlement

Five of the top U.S. mortgage lenders last month reached settlements worth more than $25 billion with the federal government and all 50 states following investigations into abusive foreclosure practices. The lenders agreed to provide $17 billion in mortgage forgiveness programs, $3 billion in refinancing and cash payments to about 750,000 borrowers who lost their homes.

For the full year, purchases of foreclosures and distressed houses totaled 907,138, down 2 percent from 2010 and accounting for 23 percent of all home sales, RealtyTrac said. There were 204,080 such deals in the fourth quarter, down 8 percent from the previous three months and 2 percent from a year earlier.

Bank-owned home sales totaled 115,777 in the fourth quarter and sold for an average $164,944, little changed from the third quarter and down 5 percent from a year earlier, RealtyTrac said. The price represents an average discount of 29 percent compared with non-foreclosure properties, down from 34 percent in the third quarter and 35 percent a year earlier.

Pre-foreclosure homes sold for an average $184,221 in the fourth quarter, down 3 percent from the previous three months and 11 percent from a year earlier. The 88,303 properties sold at an average 21 percent discount relative to non-distressed houses.

RealtyTrac sells default data from more than 2,200 counties representing 90 percent of the U.S.

© Copyright 2021 Bloomberg News. All rights reserved.

Thursday, 01 March 2012 09:45 AM
Newsmax Media, Inc.
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved