Distressed Housing Market and the Grwoing Role of Short Sales
June 28, 2010 Freddie Mac CEO Ed Halderman issued a press release on the state of the distressed housing market and how short sales are increasingly an important part of the solution. Some quotes from the press release that stood out;
- Approximately three million borrowers have lost their homes to foreclosure since the start of the recession and at least five million more are at risk of losing their home.
- Sometimes it's just not financially feasible for the borrower to remain in the home. This is more likely to happen with borrowers who are struggling from job loss, curtailment of income, a health event or who bought more house than they could afford. In theses cases, the best scenario for all parties is to help the borrower find a graceful exit from home-ownership.
- Short sales are a growing part of our foreclosure avoidance toolkit at Freddie Mac - growing more than 600 percent over the last two years.
- While losses can vary widely, several independent studies find them (foreclosures) to be over $50,000.00 per foreclosed home or as much as 30 to 60 percent of the outstanding loan balance.
- It's important to note that while short sales add to housing supply and thus put downward pressure on home values, they tend not to suffer from lack of maintenance or damage to the extent that foreclosed or abandoned properties do. As a result, the negative impact on neighborhood home values is mitigated when short sales help avert foreclosures.
I found the press release very positive in the sense that Freddie Mac is effectively saying, short sales are an important tool in helping the country get through the financial meltdown.
Comments(1)