Darci Marchese, wtop.com
WASHINGTON – The housing market has been battered and bruised by foreclosures since the housing crisis began, but a new trend is shaping up. It’s all because of the banks growing weary of the long foreclosure process.
Daren Blomquist, vice president at RealtyTrac, says when homeowners stop making payments or get behind, banks would typically begin the foreclosure process and then sometime along the way, offer the homeowner a short sale. That’s when the sale of the home is short of what the mortgage is worth.
“This is kind of a natural, rational reaction on the part of banks to say look, foreclosure has become very difficult,” says Blomquist.
He adds that banks still lose money on a short sale, but says, “They’re losing less by selling via short sale early-on than by trying to navigate that whole foreclosure process that can take months even years.”
In Maryland, the entire foreclosure process takes, on average, more than a year and a half and typically the homeowner isn’t making any payments the entire time.
The trend is evident in the numbers. RealtyTrac reports in July nationwide, 23 percent of all housing sales were foreclosures, but another 18 percent of all sales were short sales that occurred before the foreclosure process began.
In Maryland, there were more sales made up of short sales than foreclosures.
Blomquist says in July in Maryland, 18 percent of all sales were short sales that occurred before the foreclosure process began while only 11 percent of sales were distressed properties sold during the foreclosure process.
Blomquist says in Virginia, 10 percent of sales were short sales prior to the foreclosure process.
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