Foreclosures Better Than Short Sales For Banks

Foreclosures Better Than Short Sales For Banks

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  • May 3, 2015

Call it an unintended consequence of a rising real estate market. With the housing market rebounding in many areas, especially in South Florida, banks are finding that it’s more advantageous to go through the foreclosure process, rather than discount a mortgage for a short sale.

This is something that homeowners in default will have to keep watch on closely. As a recent by Black Knight Financial Services’ Mortgage Monitor Report found that foreclosure and sale of the resulting REO property may provide banks with a better alternative than short sales, which is a complete turnaround from just a few years ago.

Real Estate Radio USA reports Foreclosures Better Than Short Sales

But the most compelling stat in their report is that there is not much incentive for banks to take back a property as an REO asset. Reason being…they don’t have to!

Trey Barnes, Black Knight’s senior vice president of Loan Data Products stated:

“Of course, REO sales have additional timelines and associated costs that impact total losses and are not accounted for in this analysis. That said, on average, REO properties are selling for 71 percent of the corresponding loans’ defaulted unpaid balance, as compared to just 65 percent for short sales. Both recovery rates pale in comparison to third-party sales at foreclosure auction, however, where average gross sales price is 116 percent of unpaid balance.”

If you’re a homeowner in default, your options are becoming limited. It may just be a matter of time. You might want to contact someone who understands what’s going on in the market.

You can read the entire Black Knight report here.

About Barry Cunningham

Remember us? was one of the co-hosts of the long-running, truly goundbreaking, and arguably the #1 online radio show about real estate investing. Real Estate Radio USA was on the air 5 times per week before podcasting became cool. But now, we're back as a full multi-media operation and we're aggressively buying houses again! We're back baby!

One Comment

  • […] But you’d better move fast. Banks are finding out that in today’s real estate market, short sales might not be to their advantage. We’re approaching a point in the market where banks are deciding that a foreclosure is better than a short sale. […]

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