RealtyTrac sees the increase in short sales as the reason behind the drop in foreclosures.  In a short sale, the lender agrees to accept less than is owed on the home.  Pre-foreclosure sales (one of which is a short sale) outnumber sales of bank-owned property in California, Arizona and 10 other states.

Bank repossessions were down 26 percent in April from 2011 for the third straight month of declines in a row.  Washington state had the third largest decline in bank repossessions with a 67 percent drop.

This fits with what we have seen happening in the Lake Chelan area, where we have seen a drastic decrease in foreclosure activity in 2012.  Chelan County has one of the lowest foreclosure levels in the State of Washington.

Foreclosure shoppers, if you haven’t been already, it is time to start watching short sales as that is where the action is shifting on distressed sales.

Your real estate agent is already required to give you a “Law of Real Estate Agency Pamphlet” before formalizing an agency relationship with a client, whether as a buyer or seller.  HB 2614 will create this change in the Agency Pamphlet:

Section 12: Short Sale.
When the seller of owner-occupied residential real property enters into a listing agreement with a real estate licensee where the proceeds from the sale may be insufficient to cover the costs at closing, it is the responsibility of the real estate licensee to disclose to the seller in writing that the decision by any beneficiary or mortgagee, or its assignees, to release its interest in the real property, for less than the amount the borrower owes, does not automatically relieve the seller of the obligation to pay any debt or costs remaining at closing, including fees such as the real estate licensee’s commission.

The state government wants to make sure that sellers understand that a short sale may not relieve them of all debts and fees, including real estate commission.  The Agency Law Pamphlet should be given to you before you sign an agreement, listing, purchase and sale, buyer’s agency agreement, etc. with a real estate agent.

Listing agreements will also be revised, in paragraph 4, to include:

If the proceeds from the sale of the Property are insufficient to cover the Seller’s costs at closing, Seller acknowledges that the decision by any beneficiary or mortgagee, or its assignees, to release its interest in the Property, for less than the amount owed, does not automatically relieve Seller of the obligation to pay any debt or costs remaining at closing, including fees such as Firm’s commission.

There are two other provisions of interest to short sellers in House Bill 2614. The first provision requires that a lender in a short sale, upon its “first written notice” to the seller, provide notice that it either “waives” or “reserves” the right to collect the full amount of the debt. The idea behind this requirement is to give the seller notice early in the process about whether the seller will be obligated for any existing debt after closing.

The second provision shortens the statute of limitations for a lender to bring an action to collect any outstanding debt after releasing its security interest in the property from six years to three years. This means that lenders will have less time to file claims against sellers to pursue any outstanding debt after a short sale.

That is your state government at work!

If you qualify, you could save about 35% of your monthly mortgage payments according to a Bank of America news release on Monday.

The offers for principal reduction are part of Bank of America’s settlement in the $25 billion dollar agreement with some other banks and 49 state attorney generals and federal authorities over foreclosure practices and documentation that became known as the robo-signing scandal.

The bank said it plans to contact more than 200,000 homeowners who could be candidates for the offers, sending letters to a majority of them by the third quarter of this year.

To be eligible for the principal reductions,  homeowners must meet certain criteria.  Those criteria include:

• The loan muse be owned or serviced by Bank of America;
• You must owe more on the mortgage than their property is worth;
• and, you must be at least 60 days behind on payments as of the end of January.

After receipt of a reduction,  homeowners have to make at least three timely payments for the reductions to become permanent.  As you can see from the above, responsible folks whose home is worth less than they owe, but who made their payments, need not apply.

This week, there were no new notices of trustee sale in the Lake Chelan are.

The foreclosure picture, showing bank owned homes and those scheduled for foreclosures, remains about the same with the newest scheduled trustee sale being a two-bedroom condominium at Chelan Resort Suites.

Flood or no flood coming?  That is the question…

Foreclosures sales, the final stage of the foreclosure process, dropped to their lowest point in over two years in March. The largest decrease was in non-judicial states (like Washington) where they decreased 14 percent month-to-month.

In the Lake Chelan valley, last year about this time we had 58 notices of trustee sale but this year we have only had 8 in the same area.

Banks appear to be ramping up short sales, which will also reduce foreclosures.  Short sales rose by 15 percent in the fourth quarter of 2011 compared to 2012.  During the same periods, sales of bank-owned homes  dropped 12 percent.

Short sales are outpacing foreclosures in several markets.  It is too soon to declare the foreclosure tsunami alert over, but the data doesn’t show it hitting yet.

They include a 2 bedroom condominium at the Chelan Resort Suites, a short sale in Chelan and several homes on the Columbia River.

Short sales outnumbered bank sales by a four to one ration in April, reflecting a national trend for banks to work with sellers on a short sale rather than foreclose.

Let us know if we can help you get your home at Lake Chelan!  We work with all types of sales, from distressed properties to regular sales.  For all the latest happenings with distressed sales, subscribe to our Free Lake Chelan Foreclosures Report.

When the media finally declare the housing crisis over, the actual bottom will be in the distant past.  In this video, they are still hedging their bets.  Much of the turnaround in the market is seen as being due to investors who are now eager to buy foreclosed homes.

The portion of national REO sales relative to total sales continued its creep in April, marking the third straight month of quarterly growth — without the typical price decline seen when REO saturation rises. Saturation was at 27.9% in April, up from 25.3% in December.

The sensitive balance between REO supply and demand will help determine how market prices react to shifts in REO saturation, Clear Capital said. If REO-to-rental investment activity increases, it likely will provide the lift needed to support price increases.

“Home prices continue to show relative strength in April with virtually no change over the short term and tapering losses over the longer term,” said Alex Villacorta, director of research and analytics at Clear Capital.

“Should investor interest continue to drive the expansion of REO-to-rental programs over the next several months, there could be a significant impact on the market overall in terms of providing a rising floor to home values,” he said. – HousingWire.com

CoreLogic reports that increased usage of loan modifications, short sales and aid supplied through the national mortgage servicing settlement has likely reduced the number of foreclosures and delinquencies recorded in the first quarter.

If this is really a reduction in the flow of foreclosures to hit the market and the programs and investment interest in foreclosures can reduce the wave of foreclosures to a stream, we may actually have a bottom in housing prices.  Of course, there are other scenarios.

RealtyTrac has a “heat” map of foreclosure trends in Washington State.  We have seen dramatically low foreclosure activity in the Lake Chelan area this year.  The March heat map shows Chelan County as having among the lowest foreclosure rates in the state.

Here’s what the foreclosure picture looks like in the Lake Chelan area as of April 26, 2012.  That is based on recorded data through April 25th.  It includes properties with Notices of Trustee sale that aren’t necessarily listed for sale nor bank owned properties.

If you want to be kept abreast of the latest foreclosure information, in detail.  Subscribe to our Free Lake Chelan Foreclosure Report.