Distressed Inventory Report 6-12-10
The Notice of Trustee Sales (NTS) keep gradually rising. Foreclosures are not rising as rapidly as the NTS. Also if you look at the MLS numbers the number of short sales are increasing. However most of the homes are not in great condition and overall the quality of the inventory that is distressed appears to be declining. If you have the patience a short sale can be a good value but not all short sales are equal. There are a number of factors that go into a successful short sale. You must have a cooperative lender and seller that understand the reality of the borrower’s situation. If there is a second mortgage involved it adds another level of complexity. Also some banks are more motivated than others. As an example those new homes or homes that had Frontier Bank was holding the mortgage on now have some flexibility. Here is why. when Frontier had the loans its capital levels were very low and as a result they had a very limited ability to write down the loan. As a result if you made an offer the response most likeley came back at “appraised value” since that is what they had the loan at and is the number that they could sell at and not further impair their capital. Now that Union Bank has acquired Frontier Bank they have sufficient reserves to take the write downs on these loans. In addition for some of the assets the FDIC will take 80% of the loss as an inducement for the acquiring bank to come in to manage and dispose of these assets. The good news is with these local banks is you get quick repsonses.
On the other hand some of your money center banks will do short sales but their process is much more cumbersome and if a second loan is involved then it can be quite difficult. They are doable. However if the lender plays too rough with borrower they often go to foreclosure but more lenders are trying to avoid this.
Here is the spreadsheet: Bellevue Foreclosure Report 6-12-10