Dennis Norman
Many investors see short-sales and foreclosures as opportunities to make money in this challenging real estate market. If you are one of them, or agree, rest assured, there are plenty more “opportunities” coming.
- Short sales increased by 45 percent during the second quarter fo 2009 to 11,700 as the pipeline of seriously delinquent loans increased.
- To attempt to streamline the short-sale process, Freddie Mac has delegated increased authority to servicers to implement short-sales.
- Mortgage delinquencies continued to increase during second quarter as higher levels of unemployment contributed to new delinquencies.
- Loans that are only one month delinquent increased by 11 percent during the second quarter to 682,000.
- Loans 60-plus-days delinquent increased by 21 percent during the second quarter to 1.3 million. Approximately 227,200 more loans became 60 days or more delinquent in the second quarter of 2009.
- Foreclosure starts increased in the second quarter by 23 percent over the prior quarter to 299,200, reflecting increase in the foreclosure pipeline as the number of 90-plus-days delinquent loans increased.
- Completed foreclosures and third-party sales during the quarter increased by 38 percent to 57,800.
The numbers show that there will be a continuing opportunity for investors to seize opportunities presented by short-sales and foreclosures for some time to come, and hopefully, the efforts to stream-line the short-sale process will help things move quicker. In addition, there will be a steady supply of REO’s as a result as well.
While it is a shame that these opportunites are the result of other’s misfortune, the reality is that in many cases this is really a win-win situation for all involved. For example on a short-sale, a seller who is underwater on their mortgage gets to avoid a foreclosure, the lender avoids having to take ownership of the property and resell it (at no doubt a lower price) and the investor gets an opportunity to buy a property at a good price. Everyone comes out ahead relative to what would happen if the investor didn’t buy the property.
The rapid growth in short-sales is almost hard to believe. In the first quarter of 2008 there were 1,776 growing each quarter and finishing the year at 15,704 for the the year. In just the first two quarters of 2009 we have already surpassed last years total number of short sales by over 25 percent with 19,759 short sales after the first two quarters of 2009.
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If the short sale process could be minimized and the timeline made faster, I’m sure there won’t be a problem in getting these into buyers hands.