Short Sale Blog

We’ve already presented you with recent numbers straight from the Federal Housing Finance Agency: more and more distressed homeowners nation-wide are taking advantage of short sales to relieve themselves of mortgages that they can no longer afford. http://seattleshortsales.com/_blog/Short_Sale_Blog/post/Short_Sales_Continue_to_Grow_in_Spite_of_Decline_in_Other_Foreclosure_Prevention_Actions/

Well, our own numbers at Seattle Short Sales, Inc., are now in for June. And they clearly show that short sales are growing here in the Seattle area. Comparing the number of short sale approval letters that we negotiated over the last six months of 2010 to those from the first six months of 2011, we found that:

• The number of new short sale approval letters that we were able to obtain from lenders grew by 43% over the six month period. In the last half of 2010 we negotiated 123 approval letters for our homeowners, and in the first half of this year that number was up to 176 new approvals.
• The average discount that the homeowner received on their balance owing also grew by 6% in the first half of this year, compared to the last half of 2010. In the second half of 2010, the average discount a homeowner received from their lender to pay out their mortgage was $96,480. But in the first six months of this year, that average discount had grown to $102,278.
• The total mortgage debt that we managed to get discounted for our homeowners grew by 52%. The total mortgage debt discounted for all the approval letters we negotiated in the second half of 2010 was $11,867,000. For the first half of 2011, that total debt discount was up to $18,000,001.

The majority of our short sale approval letters come with full deficiency waivers. This means that the homeowners, who were in a negative equity situation (owing more on their mortgage than the house was worth) are not responsible for paying back the debt discount - the shortfall on the discounted amount they paid back of their loan. They were able to rid themselves of the mortgage that they could no longer afford, and are free to get a new financial start in life.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

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An analysis published yesterday in the Seattle Times indicates that more than one third of mortgaged homes in the Seattle area are worth less than what the owners owe on their mortgages. This situation is known as “negative equity.”

The study looked at homes in King, Pierce and Snohomish counties. By the end of 2010, 34.3% of single-family homeowners with mortgages owed more on their mortgages than the value of their home. This number is up from just 23% one year ago, and also higher than the national average of 27%.

This situation is worse in Seattle than for other parts of the country because Seattle has lagged behind the rest of the country in feeling the effects of the mortgage crisis. As of last September, Seattle home prices were considered to be overvalued, which means that they could be affected even harder by coming home price drops - which are predicted to continue their downhill slide for another year or more. By late last year, Seattle was recording the highest rate of increase of foreclosures in the country.

Negative equity means that homeowners are more likely to default on their mortgages - whether they do so because they no longer have a choice, or whether they choose a strategic default.

According to the article, 28% of homes that sold in the Seattle metropolitan area in December were sold at a loss, relative to their original purchase price. In Snohomish County, that figure was 42%. Homes in King, Pierce and Snohomish counties are now worth approximately what their value was in 2004.

One way that homeowners are extracting themselves from a negative-equity situation is by undertaking a short sale. They work with their lender to obtain approval to sell the home at a loss, and to use the proceeds of the sale to pay off the loan at a discount. The number of short sales undertaken by homeowners struggling with negative equity grew by 250% from July 2009 to July 2010.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

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