Homeowners Discouraged by Short Sales; Investors Picking up Slack

While homebuyers are pursuing shortrnsales with less enthusiasm because of the lengthy and unpredictable process,rninvestors are finding them a new target of opportunity.  Campbell/Inside Mortgage Finance HousingPulsernTracking Survey found that investors continued to boost their activity in the housingrnmarket during February and accounted for 24.2 of all housing transactions andrn30.6 percent of short sales.</p

Distressed sales accounted for 48.7rnpercent of all housing sales in February based on a three-month moving averagernrepresented by the HousingPulse Distressed Property Index (DPI), the secondrnhighest level recorded by the survey and the 25^th month in a rowrnthat the DPI has been above 40 percent.   </p

Since September the percentage of investorsrnbuying homes has increased by 3.3 percentage points and the investor share ofrnshort sales by 4.7 points.  In contrast, the proportion of homebuyers purchasingrnshort sales has dropped since September.</p

Campbell says the waning interest ofrnfirst-time homebuyers and current homeowners in short sale transactions isrnlargely driven by dissatisfaction with the long-approval times of mortgagernservicers and unpredictable closing dates. Investors do not have to deal withrnsome of the resulting complications such as breaking a rental lease, movingrnfrom another home on short notice or finding themselves stranded between homesrnby an unanticipated delay or cancellation of the sale.</p

Mortgage servicers have been usingrn”cash-for-keys” payments to motivate delinquent homeowners to engage in shortrnsales. Cash-for-keys payments are often $3,000 or 1% of home value, but canrnreach up to $25,000 and more for high value homes in areas with longrnforeclosure timelines, HousingPulse respondents reported. </p

The Campbell/Inside Mortgage FinancernHousingPulse Tracking Survey involves approximately 2,500 real estate agentsrnnationwide each month and provides up-to-date intelligence on home sales andrnmortgage usage patterns.

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