July 4, 2010 By Derik N. Lewis, Esq.
Freddie Mac is reporting that it has seen the number of short sales increase 600% from 2008 as lenders try to reduce the loss severity realized in a foreclosure ( See my blog post on loss severities ). Freddie Mac states that it is doing everything it can to prevent foreclosures and that short sales are becoming an ever more popular tool in situations where loan modifications have either failed or are simply not an option. In fact, both Freddie Mac and Fannie Mae have implemented the HAFA Short Sale Program (See also: http://lawyersrealtygroup.com/hafa-short-sales).
In a related story, Bank of America, one of the largest lenders in the U.S., has instituted a policy of favoring short sales and other alternatives to foreclosure. The lender will add 1,000 employees to the short sale staff and will increase its focus on short sales. BofA recently stated that they are “going to do everything possible to liquidate properties prior to foreclosure," and they “will do everything [they] can to do short sales." Lenders are starting to understand that short sales and other foreclosure alternatives help borrowers avoid the trauma and stigma of foreclosure, shorten the period before they can buy a new home, and may cause less damage to their credit reports. And, in the process, lenders reduce their losses. Let’s hope they continue the push toward short sales as a key alternative to foreclosure. For more information, please watch our webinar “Foreclosures & Short Sales: Navigating the Minefield” at www.LawyersRealtyGroup.com.
ABOUT THE AUTHOR: Derik N. Lewis is a California real estate broker and a practicing real estate attorney. Derik graduated magna cum laude from Boston University School of Law. He has 20 years of real estate experience and has served as legal counsel for some of the world’s largest lenders. During the current real estate downturn, Derik is applying his knowledge and experience to help homeowners, investors, and developers find alternatives to foreclosure. Borrowers facing default or foreclosure can get a skilled broker and experienced real estate attorney by contacting Derik at (949) 613-5900.