Short Sales Out Pace Foreclosures

Short sales of U.S. homes rose to a three-year high in the first quarter as banks agreed to let more bor rower s unload property at a loss, putting the transactions on pace to surpass deals for foreclosures, RealtyTrac Inc. said. Sales of homes in the pre-foreclosure process increased to 109,521, up 25 percent from a year earlier and the most since the first three months of 2009, the Irvine, California-based data service said today. Most of those transactions were short sales, in which the lender agrees to a price that's less than the loan balance. The number of bank-owned homes sold during the quarter fell 15 percent from a year earlier to 123,778. "By next quarter nationwide, we're actually going to see the number of pre-foreclosure sales outnumbering bank-owned sales," Daren Blomquist, RealtyTrac's vice president, said in a telephone interview. "It's a paradigm shift in the way lenders are dealing with their distressed loans."

Lenders are stepping up short sales to reduce losses, take advantage of government incentives and avoid legal challenges to foreclosures as they struggle with non-performing home loans, he said. "Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short-sale transactions," RealtyTrac Chief Executive Officer Brandon Moore said in the report.