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Short Sales Coming on Strong as Lender Acceptance Grows

(8/23/10)

Demand for short sale properties is skyrocketing. Loss mitigation experts have been reporting for many months the explosive growth in short sale demand. Over half of all short sale volume is generated by housing's hardest hit states. Lenders, servicers and investors have recognized that in many instances a short sale can be a more preferable alternative to foreclosure, though short sales as a loss mitigation vehicle do have an adverse financial impact on lenders and servicers. A short sale by definition will result in a loss to the lender and yet it has become a key force in stabilizing the real estate marketplace. A transparent and collaborative effort is required for lenders to reduce loss and fraud in the short sale process through the sharing of both pre-sale and post closing information. For the short sale seller, having reliable data on home prices as well as being fully informed of any and all potential buyers is critical. Problems with short sales typically arise in several situations, the first occurring when a subsequent sale price is significantly higher than the initial short sale price and second, when a subsequent sale transpires within a very brief time frame of the initial short sale. Technology and the ability to outsource have resulted in more rapid short sale processing and streamlined information has made possible faster turnaround times on purchase contract approvals and closings. A short sale can be completed in as little as 2.5 months whereas it had been taking twice that length of time previously.

 

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