We thought some of you might be interested in what Equator's COO, John Vella thinks about short sales volumes for 2011. So here is an excerpt of his answers during an interview with Housing Wire Magazine.
HW-With so many initiated transactions on the platform, will 2011 be the year of the short sale?
JV -"With 1 in 5 borrowers under water on their home equity and an estimated 1.5 million foreclosures scheduled for 2011, the opportunity for short sales will be better than ever. Investors usually see a 20% to 30% better execution on a short sale versus an REO sale when it comes to loss severity. With the foreclosure volume, current and pending REO inventories, servicers will be pressed to do more short sales in 2011. Servicers are more equipped and skilled than ever in the short sale process which will allow them to convert failed loan modifications and potentials into short sales. The short sale process, real estate agents' capabilities and technology have evolved, making for a more mature relationship between the borrower, lender, and agent. If the servicers are properly staffed and using proven short sales technology, in 2011 they could see an increase of at least 25% over 2010 in completed short sales."
HW-What is proving to be the weakest link in the chain of short sale decision making?
JV-"Short sales can be difficult to execute due to a combination of factors. In order for a transaction to move forward the investor must agree to a realistic list price and net proceeds amount. The timely establishment and reaction to offers is critical, especially when a second lien and mortgage insurance is involved. The agents must do their homework and ensure they are providing the proper documentation and pre-qualifying buyers to expedite the process. The servicer must act as a well-organized conduit between the agent, borrower, investor, mortgage insurance company, and the various vendors involved. To say there is one common weakest link is very difficult, since no two short sales are alike. When there is uncertainty and so many parties involved in a transaction, the proper technology can make all the difference."
To read the entire article, check out: http://www.housingwire.com/2011/01/06/equators-vella-short-sales-set-to-swell-25-in-2011. We want to hear what you are seeing with your short sale volumes. Tell us what worked for you in 2010 and what you are anticipating for 2011. Also, Equator now has updates and info on Twitter and Facebook. Follow us at www.twitter/EquatorLLC and www.facebook/Equator.com.
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