Large institutional investors -- most notably Blackstone ( BX) -- have pumped millions into foreclosed homes with the intention of converting them into rentals, as demand for rental housing continues to climb.
Short Sales Instead of Multiyear Foreclosures
Short sales of homes not in foreclosure now account for 22% of all sales, a slightly greater share than foreclosures. In the fourth quarter of 2012, short sales were up 17% from the previous year. Banks have increasingly pursued short sales instead of foreclosures as timelines to repossess homes now stretch into three to four years in states that follow a judicial foreclosure process. Even in non-judicial states, where foreclosure action can be initiated without court approval, short sales have been viewed as the preferred alternative as the costs of foreclosure are significantly higher. The five biggest mortgage servicers, including Bank of America ( BAC), JPMorgan Chase ( JPM), Citigroup ( C), Wells Fargo ( WFC) and Ally Financial are also obligated under a national mortgage settlement to offer borrowers alternatives to foreclosures such as short sales. According to the latest report from the settlement monitor, banks conducted short sales totaling $19.5 billion between March 1 and Dec. 31, 2012. -- Written by Shanthi Bharatwaj in New York. >To contact the writer of this article, click here: Shanthi Bharatwaj. >To follow the writer on Twitter, go to h owttp://twitter.com/shavenk. >To submit a news tip, send an email to: firstname.lastname@example.org.