Breaking: Las Vegas Sun: Banks seeing advantages of home short sales

Lenders might get more money, faster, than through foreclosure

A predicted new wave of foreclosures may not arrive if lenders turn to short sales, which will require them to retrain loss mitigation workers.

By Brian Wargo

A prominent real estate analyst says banks are showing more interest in working with financially pinched homeowners in the sales of their “underwater” homes by agreeing to take some of the hit themselves.

Larry Murphy, president of the real estate monitoring firm SalesTraq, says he expects 25,000 repossessions in Clark County this year, about the same as in 2008. But Murphy says he thinks banks are starting to realize it makes better financial sense to allow owners to sell homes through short sales than to repossess them.

The reason banks are increasingly interested in signing off on short sales is economic: The median price of homes sold through foreclosure is $116,900, compared with $150,000 for homes sold through short sales, Murphy says.

Sidestepping foreclosure also means banks don’t lose months of mortgage payments while gaining possession of the property, and it may prevent damage to the property that is sometimes inflicted by the dislocated homeowner.

For those reasons, banks are wising up and allowing more short sales to go through, Murphy says.

“I would like to send this to every bank,” Murphy says of information about short sales. “It says that when you foreclose on a property and throw the owner out, the house sits vacant and sometimes the owner trashes it on the way out, the lawn dies and the homeowners association fees don’t get paid.”

Banks geared up their departments to handle foreclosures and now will have to do the same for short sales, Murphy says.

“The solution may not be as easy as it appears for banks to quit foreclosing on properties and start doing more short sales,” Murphy says. “It is … whether banks finally get it. It represents an opportunity and why I am not going to predict the second tsunami of foreclosures that we have been talking about the past six months. It has not materialized yet in Las Vegas.

The bad news, he says, is that thousands of bank employees who have been specializing in loan modifications will have to be trained to handle short sales, which will slow the process.

Read the whole story:   via m.lasvegassun.com