Will There Be Another Glut of Foreclosures on the Horizon?

Will there be another glut of foreclosures on the horizon?  If you watch news programs that predict market activity, they certainly are predicting more foreclosures hitting the market.  A wave of Option ARMS are going to reset soon, and that means plenty of home owners who were making interest only payments, or partial interest only payments, will be facing increased payments as their mortgage adjusts to principal AND interest, amortized over whatever period of time is left on their 30 year loans.  Scary thought.

The properties that are secured by these Option Arms may never make it to market as foreclosures.  Why?  Because many markets, like my own have been educating the public in Short Sales.  Knowing that they could avoid foreclosure, save a huge credit hit, and work with the bank to sell their home before it is repossessed, why on earth would a homeowner let a property go to foreclosure?

Even home owners that declare bankruptcy can sell their homes in short sales.  The two are not mutually exclusive. 

Short sales hold benefits for both the sellers and the mortgage holder(s).  The benefit to a seller, particularly those that hold security clearances with government agencies, is avoiding foreclosure and a large hit to the credit that comes with foreclosure.  The benefit for the bank is that they save thousands of dollars in legal fees, and lost time on the market, by not having to repossess the property. 

So if you are waiting for another round of foreclosures to hit the market, don't be too surprised when you see the market hit with a glut of short sales instead.