Short Sales, REOs Near Crisis High Set in Early 2009

Foreclosure salesDistressed sales – short sales and real estate owned, REOs – accounted for 29 percent of all sales in January, the highest level since April 2009, according to First American CoreLogic today.
The real estate data firm said the peak in distressed sales occurred just three months before that previous high – in January 2009 – when their share reached 32 percent of the market.
Distressed sales then fell to 23 percent by July, before resuming an upward trend.
CoreLogic’s report indicates the foreclosure crisis continues to run its course, with occasional dips in total foreclosure filings. But certain communities within a small number of states are feeling the brunt of prolonged processes associated with short sales and REOs.
Economists and critics of the government’s slow-moving mortgage modification program say the effort is only postponing foreclosure-related sales, keeping overall home prices depressed and deepening the crisis.
The government has responded with new programs targeting “underwater” homeowners that forgive a portion of the mortgage principal. The Obama Administration also launched this week a new effort involving expedited short sales.
REO transactions are bank owned properties that are sold to a third party and recorded as deed transfers. Short sales involve the distressed sale of a property for a price that is less than the amounted owed in mortgages.
During the last 12 months, there were 974,000 distressed sales: 740,000 were REOs and 234,000 were short sales, CoreLogic’s report said.
Both increased in January: REOs 22 percent, up from 19 percent in December, but down from a year ago when it was at 27 percent. Short sales represented 8 percent of all sales in January, up from 7 percent in December and 5 percent a year ago.
Among the largest 25 markets, Riverside, CA, had the largest share of distressed sales in January (62 percent), followed by Las Vegas (59 percent) and Sacramento (58 percent).
The top REO markets were: Detroit (48 percent); Riverside (47 percent); and Las Vegas (45 percent).
The top short sale markets: San Diego (19 percent); Sacramento (18 percent); and Oakland (16 percent).
CoreLogic used public record property transactions covering 2,200 counties in the U.S. These sales cover about 85 percent of all sales transactions.
Here’s First American CoreLogic’s full report.

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