American Banker Article Short Sale Surge
May 5th, 2010
Short-Sale Surge
With more borrowers falling out of the Home Affordable Modification Program, short sales are finally gathering steam.
Short sales have skyrocketed in the past two months after overtaking sales of real estate owned (properties that had been repossessed) in January, suggesting that the government's Home Affordable Foreclosure Alternatives program kick-started the short-sale market even before going into effect April 5.
Roughly 28,000 REO sales were completed in March by seven of the top-10 mortgage servicers, nearly flat from 26,000 in February, according to data provided to American Banker by Equator LLC, a Los Angeles software firm. But 55,000 short sales were done in March, up from 29,500 in February, according to Equator. In a short sale, the borrower sells the home for less than is owed on the mortgage and the lender accepts a discounted payoff.
Christopher Saitta, Equator's chief executive, said it will take the market some time to absorb all the distressed properties, whether they are sold as REOs or in short sales. "I think it's going to take two to three years to get through everything the foreclosure moratoriums and the economy have created," Saitta said. "We're likely to see more short sales earlier in the process and servicers are going to have to deal with that volume."
Servicers use Equator's technology to communicate with asset managers, real estate agents and other vendors. Last month, Equator hired John Vella as its chief operating officer. He had been an executive vice president at GMAC Inc.'s Residential Capital LLC and was the president and CEO of EMC Mortgage Corp., a unit of Bear Stearns Cos., which is now a part of JPMorgan Chase & Co.
About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 700 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.