Foreclosure Homes Increase to 24% of Purchases

March 08, 2012 / Russell Legato, Residential Property Analyst

Foreclosure Homes constituted nearly a quarter of all residential sales in the fourth quarter of 2011. Those granting the loans approved more sales referred to as short sales than any other types. A short sale is defined as one in which the price of the property is less than the amount still owed on the mortgage.

Foreclosure Homes Increase to 24% of Purchases

An expert predicts that foreclosure-related sales will increase in the year 2012. The category of pre-foreclosure sales will also show an increase. There was an eighteen month delay when an investigation into foreclosure paperwork was undertaken by the federal and state governments. Following that delay, lenders seemed to conclude that short sales were preferable to owning a property on which the borrower does not make any payments.

The total number of pre-foreclosure properties that were sold in the fourth quarter of 2011 constituted one tenth of all transactions.

As for the federal and state investigations, five top U.S. mortgage lending institutions settled with the federal government for more than $25 billion. Lenders will grant $17 billion in mortgage forgiveness programs and $3 billion in refinancing and cash to approximately 750,000 people who lost their homes.

For the full year, foreclosure homes and distressed properties accounted for nearly one fourth of all home sales. Sales of bank owned homes numbered 115,777 in the fourth quarter, remaining stable with prices in the third quarter. It was a five percent decrease compared to 2010. Pre-foreclosure homes sold for three percent less on average and 11 percent less than in the previous year.

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