Yesterday we saw how the number of short-sale listings were dropping off around our north county coastal region, in spite of the expiring relief on debt-tax.
In the New Age of Coddling, we have seen the government devise several programs to rescue distressed homeowners, who enter the ‘Modification Waterfall’, where every cure is applied until one sticks. If all loan-mod attempts fail, then the next recommendation is to affect a short-sale. We’ve been hearing all year that lenders have converted to short-sales as their primary method of disposing of defaulters….by have they?
Around NSDCC, it appears that lenders took their foot of the gas altogether.
We stormed into 2012 with guns a-blazing, with both new listings of short-sale and REOs increasing rapidly in the first quarter. But then it looks like somebody pulled the plug – for the last two quarters both REO and short-sale listings have been trending lower:
If lenders don’t threaten to foreclose, there is little to no incentive for defaulting homeowners to short-sale – the free rent program is their preference!
But there are two possibilities that could cause a dual decline of REO and SS listings:
- Lenders stopped threatening to foreclose.
- Homeowners starting paying again, once they heard that the market might be coming back.
Either way, the distressed listings appear to closing out.
Of the 783 houses for sale today, there are 19 REO and short-sale listings – or 2.4% of the inventory!