Short sales have to be the best device for those determined to kick the can down the road – the processing delays are already legendary, and many end up in the black hole of goo.
IF the servicer gets pressured about making a decision, they can resort to ‘the big start-over’, and sell the loan to another entity.
Eric Wolff of the North County Times touches on it here, and below you can see how the closed short sales have been increasing this year:
After the vaunted ARM-reset chart, the Great Recession, unemployment through the roof, and state and local governments as broke as ever, many thought (including JtR) that by now we’d be in a bank-directed-sales environment only, with nothing but REOs and short sales.
But with the REO listings dwindling, the regular sales are enjoying a healthy resurgence – May and June regular sales were as high as they have been in a year:
If the banks’ intention is to make the liquidation of property as excruciating as possible in order to drag it out for years, they have found the magic formula – spit out a few trustee sales, and direct their defaulting borrowers to loiter around the short-sale bin. This might take a while?