Tuesday, August 24, 2010

Analysis of Foreclosure Short Sales Trends, Risks, and Opportunities.

CoreLogic analysis is HERE

From summary: 
► The number of short sales has more than tripled since 2008. Multiple variables indicate short sales will continue to be a significant factor for the industry.
► During 2009 and 2010, over half of all short sales (55.8%) occurred in four states: California, Florida, Texas, and Arizona.
► Approximately 4% of short sales have a subsequent resale within 18 months.
► Investor-driven short sales are not inherently bad, since investors provide the industry with necessary liquidity.
► Short sale transactions are “risky” for lenders when either (1) the second sale amount is vastly higher than the initial short sale, and/or (2) the second sale transaction happens too soon after the first.
► While the exact definition of what constitutes short sale fraud continues to evolve, it clearly exists. Our analysis shows a consistent pattern of lenders incurring more loss than necessary. About one in 53 short sale transactions in our study (1.9%) was part of an egregious flip — and therefore deemed risky.
► We estimate that lenders are currently incurring unnecessary losses in short sale transactions at the rate of $310 million per year.
► Information-sharing groups and consortia are key to lenders mitigating short sale risk and reducing associated costs. Only by leveraging multiple-lender data and experience can individual lenders see negative short sale risk patterns in time to avoid the financial consequences
Originally created and posted on the Oregon Housing Blog.

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