The shift from foreclosing to short-selling is having its challenges.
The banks and servicers are not foreclosing at the same pace, presumably to give defaulters a chance to work their way through the loan-mod waterfall.
Once a loan modification has been attempted and failed, the servicers can recommend that a borrower should short sell their home – but they can’t make them sell it, or even list it. All they can do is keep applying foreclosure pressure, so the borrower has no other choice.
But by letting their foot off the foreclosure gas pedal, it appears that the banks and servicers, with help from government intervention, have created a defaulter purgatory, and free-rent bonanza.
Both foreclosures and short sales are declining in San Diego County:
New short-sale listings in San Diego County: