Archive for September, 2009
September 2nd, 2009 - Short Sales: Banks Are Learning
Banks are beginning to see that short sale transactions are a viable option and are generally preferrable to loan modification. Banks are finding in studies that more than 30% of delinquent borrowers lift themselves up to current payments without a modification. This means that 30% of the money spent on modification is then wasted on this “self-cured” risk.
That’s a cost the bank doesn’t need or want. If they work on 100 loan modifications, and 30 of these modifications correct themselves without the need for modifying the loan, then that’s time wasted.
The second cost comes from re-default. About 40–50% of all modifications fall back into delinquency within six months. For them, foreclosure was simply postponed. And this is a tremendous waste of time for the banks.
According to the Office of Thrift Supervision and the Office of the Comptroller, the number of short sales completed jumped 208 percent during the first quarter of this year compared with the same period in 2008.
So if you’re behind on your mortgage and want to learn more about all your options, call me 1-877-765-3123, ext. 51.