Tags: Short | Sales | Homes | Foreclosures

RealtyTrac: 'Short Sales' of Homes Exceed Foreclosures in 12 States

Friday, 20 April 2012 07:51 AM

More and more distressed homeowners are agreeing to short sales — selling their homes for less than what's owed — than going through painful foreclosure, according to real estate research RealtyTrac.

Short sales were up 33 percent on year in January and outpacing foreclosure in 12 states, RealtyTrac reports, according to USA Today.

More short sales "is mostly a good thing," says Ira Rheingold, of the National Association of Consumer Advocates.

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The trend may reflect more homeowners are being denied loan modifications to let them stay in their homes or that homeowners are finding it easier to take the hit and move on.

RealtyTrac's research reveals short-selling was increasing in states that suffered the most in the housing downturn, including California, Arizona, Florida and nine others, USA Today adds.

Critics of short-selling say the move brings down home values for houses in the surrounding neighborhood.

Fitch Ratings, however, says short-selling houses is good for the economy.

"Fitch expects the increase in short sales to continue because of the potential benefits afforded to both lenders and borrowers. Some borrowers may prefer short sales because, though they cannot stay in the property, they often walk away with cash incentives from lenders and healthier credit reports unmarred by foreclosure," Fitch analysts conclude.

"For lenders, short sales provide a more efficient and cheaper alternative to the increasingly lengthy and costly foreclosure process."

The Federal Housing Finance Agency has said it will tweak rules to allow for speedier short sales.

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