Rather than complete a lengthy foreclosure process, mortgage lenders are urging their distressed customers more and more into short sales.
The trend is especially pronounced in Indian River County, data released Thursday by RealtyTrac shows.
While sales of Indian River County homes taken back by lenders in foreclosures or REOs dropped almost 44 percent in this year’s first quarter compared with the same period a year ago, short sales increased by nearly 69 percent, California-based RealtyTrac’s First Quarter U.S. Foreclosure Sales Report said.
W.D. “Chic” Acosta, Seacoast National Bank’s executive vice president of mortgage banking, said, “Larger banks have worked real hard on their process for short sales, so they’re trying to push the borrower to short-sell.”
Distressed borrowers are putting up little resistance, Acosta said, because “they realize the short sales will do less damage to their credit.”
RealtyTrac Vice President Daren Blomquist said short sales are not only more expedient but less risky for lenders, who recently settled a lawsuit by 49 state attorneys general over the “robo-signing” controversy, which revolved around allegations that lenders took short cuts in preparing documents supporting foreclosure actions.
Short sales are similar to a plea bargain, Blomquist said, in the sense that a homeowner waives his right to complain later that the lender’s foreclosure action was improper, just as a defendant in a criminal case waives the right to trial and appeal.
Compared with a year ago, short sales and REOs combined dropped 11 percent in Indian River County and 5 percent in St. Lucie County. Martin County, with a 21.5 percent decline from a year ago, had a bigger drop than the 18.9 percent statewide.
Among all residential real estate sales, distressed sales dropped more in Martin County, from almost 17 percent a year ago to about 12 percent so far this year. And prices of distressed homes sold in Martin County also dropped more, mostly due to lower prices for REO sales.
And while REO sales in Indian River County fell from nearly 17 percent of all residential real estate transactions in 2011′s first quarter to less than 10 percent in the first quarter of this year, short sales rose from about 7 percent to almost 12 percent.
The percentages of short sales and REOs among total sales were much more consistent in St. Lucie and Martin counties.
DISTRESSED SALES AS PERCENT OF ALL RESIDENTIAL SALES
1st Quarter 2012 4th Quarter 2011 1st Quarter 2011
Short Sales REOs Short Sales REOs Short Sales REOs
Indian River 11.8 9.6 8.9 9.8 6.9 16.8
Martin 5.2 7.1 4.9 4.0 8.0 8.8
St. Lucie 13.3 11.3 12.1 7.9 13.2 11.9
Florida 12.8 10.2 11.0 9.4 10.3 16.7
U.S. Total 12.4 14.0 9.8 12.6 9.2 15.4
Source: RealtyTrac U.S. Foreclosure Sales Report