Short Sale Article in East Valley Tribune

This is an article in the East Valley Tribune about short sales and the market. I, along with Tara Bianco was interviewed by Ed in regards to what we are experiencing in this market.

2nd quarter past-due loans, foreclosures break records

Arizona again among 4 states with highest rate

By EDWARD GATELY TRIBUNE

The national mortgage delinquency rate rose to a seasonally adjusted 9.24 percent of all loans in the second quarter, while Arizona continued to lead most states in distressed mortgages, according to the Mortgage Bankers Association's National Delinquent Survey.

The national rate was up 12 basis points from the first quarter and 283 basis points from a year ago.

The new rate breaks the record set last quarter.

The rate includes loans that are at least one payment past due, but does not include loans somewhere in the foreclosure process. The percentage of loans in the foreclosure process was 4.30 percent at the end of the second quarter, an increase of 45 basis points from the first quarter and 155 basis points from a year ago.

"The states of California, Florida, Arizona and Nevada continue to have a disproportionately high share of foreclosure starts, although the share has fallen slightly from last quarter," Jay Brinkmann, the association's chief economist, said in a statement. "Those four states had 44 percent of all the nation's new foreclosures during the second quarter of this year, down from 46 percent in the first quarter."

The percentage of loans 90 or more days past due and loans in foreclosure both set new record highs, breaking records set last quarter.

Sheryl Robinson, associate broker at East Valley-based Home Key Realty, said the evidence is everywhere that more homeowners are in financial duress and looking for help. All of her time is spent helping distressed homeowners avoid foreclosure through short-sales.

"There are a lot of good people in bad situations that are facing this and are having to make some tough decisions on what to do to avoid foreclosure, and one of the options they can take is a short-sale," she said. "The lender wants to see that the people have tried to get a loan modification and exhausted that option. The banks want to see that they've attempted to do a short-sale as opposed to a deed-in-lieu (give the property back to the lender)."

In a short-sale, the homeowner sells the mortgaged property for less than the outstanding balance of the loan and turns over the proceeds to the lender(s), usually in full satisfaction of the debt.

"A lot of people are calling sooner to say, ‘Look, I think I need to short-sale so I don't have to have a foreclosure,' because a lot of people would rather avoid that at all costs," Robinson said.

More people are choosing to walk away from homes, and not because they can no longer afford them, said Tara Bianco, senior loan officer at AmeriFirst Financial in Mesa.

"There's individuals in neighborhoods who are looking around and they're $125,000 upside down and they're trying to make that decision of ‘Why am I going to continue to make payments on a house that I'm so far upside down in? My neighbors have been able to renegotiate their mortgage or have allowed their home to go into delinquency in hopes of a modification of some sort,'" she said.

Homeowners who bought their homes in 2003-04 in the outlying areas of the East Valley are significantly upside down, and they're calling to find out what the adverse effects are if they choose to walk away, Bianco said.

"There's still a lot of people trying to figure out if there's an opportunity to leverage the market if they are upside down in their home," she said. "Can they afford to buy another home and hopefully make some money on that house to offset the loss they're going to suffer on the house they're in," she said.

"But it's becoming increasingly difficult to do that. The banks are working together ... to prevent people from buying new homes and walking away from the homes they're in."

EVTRIB.COM