Arizona Banks Shift To Short Sales – More States To Follow ?
After more than 175,000 foreclosures in metro Phoenix in the past several years, mortgage lenders in Arizona have done an about-face, approving a record number of short sales. Rather than taking back homes and selling them at auction, bankers say, they are more frequently allowing distressed owners to sell the homes for less than the borrowers owe. The trend could lead to rising sales prices, because short sales in metro Phoenix tend to sell for higher prices than homes taken back by lenders and resold. The consensus among lenders and housing-market experts at the standing-room only event Thursday was that short sales would continue to climb in the Phoenix area and foreclosures would continue to fall. The trend could lead to a rise in the median home value as soon as next year, because it decreases the number of homes sold for bargain prices at auction.
A shift to short sales is momentous for lenders, which only two years ago handled delinquent mortgages almost exclusively by foreclosure. After taking the homes back, banks resold so many for such low prices that sales pushed the area’s median home price to a 10-year low. Now, top lending executives say, they are seeing that while short sales mean a loss for the bank, that loss is less than they would suffer from a foreclosure auction. At the same time, housing-market indicators are showing positive signs. Arizona’s mortgage delinquency rate is down 32 percent since 2009, a bigger drop than any other state, de Laveaga said. He said the fact that the nation’s three biggest lenders sent executives to speak to Arizona real-estate agents and mortgage brokers in the audience is a sign they want to do more to slow foreclosures.
