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SHORT SALES UP 33%, OUTPACE REO SALES IN 12 STATES With the number of short sales increasing and even outnumbering REO sales in certain states, experts speculate short sales will be key to preventing an even greater swelling of foreclosed properties on the market. Compared to a year ago, pre-foreclosure short sales increased 33 percent in January, according to a RealtyTrac report issued in April. Short sales even outpaced bank-owned REO sales in 12 states, including Utah, California, Arizona, Florida, Indiana, Colorado, New York, and New Jersey. Thirty-two states saw annual increases in pre-foreclosure sales with Georgia leading the pack with 113 percent more short sales in January than a year earlier. Despite the increase, Daren Blomquist, VP of RealtyTrac and author of the company's report, points out that short sales declined on a long-term basis, but January's report could signal a turning point. "Short sales have long held great promise as a market-based solution to the nation's foreclosure problem, but short sales transactions over the past three years have actually declined after peaking in the first quarter of 2009," said Blomquist. "January foreclosure sales numbers, along with first-quarter foreclosure activity, strongly indicate that downward trend is ending, and we believe 2012 could be a record year for short sales." Average pre-foreclosure prices saw a decline, according to the report, with the average sales price in January at $174,120, down 10 percent from January 2011. This, RealtyTrac stated, shows that lenders are 12 more willing to approve more aggressively priced short sales. In January, a home sold via short sale sold at a 21 percent discount on average compared to the average price of a home not in foreclosure, according to RealtyTrac. The states with the biggest discounts were Massachusetts, Missouri, California, Indiana, and Georgia. The time it took to approve a short sale was a bit lower for the 2012 first quarter, averaging 306 days, down from 308 days in the fourth quarter of 2011 and down from a peak of 318 days in the third quarter of 2011. The short sale timeline begins when a property starts the foreclosure process to when it's sold as a pre-foreclosure. The average time to sell a pre-foreclosure actually tripled since the first quarter of 2007 when it took an average of 113 days. There's nothing short about short sales. If you can survive the process and make it happen, it's going to be a better outcome for everyone, RealtyTrac VP Charlie Engel said during an Internet broadcast announcing the results of the company's report. With foreclosure starts—either default notices or scheduled foreclosures—numbering more than 100,000 in March, this means more opportunities for short sales, according to RealtyTrac. Compared to the month before, March foreclosure starts increased 7 percent but were down 11 percent from a year ago. Other properties with potential to become short sales are delinquent loans, which represented approximately 3.5 million properties, according to a fourth-quarter 2011 survey from the Mortgage Bankers Association. IN THE NEWS RealtyTrac Ranks Lenders that Transact Short Sales Faster and for Less Pursuing a short sale is often considered as a painstaking process, and it's not uncommon to hear complaints about slow responses from servicers and last-minute offer rejections. Fortunately, not all lenders and servicers are the same when it comes to dealing with short sales. RealtyTrac compiled a list of data revealing which institutions tend to move through the process quicker and for less. Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA) had the shortest timelines at 193 days in January 2012, a decrease compared to a year ago in January 2011 when their short sales averaged 248 days. RealtyTrac measures the short sale timeline as from the day a property starts the foreclosure process to the time it's sold as a pre-foreclosure property. Ally Financial came in second in the rankings, reducing its short sale timeline from 393 days in January 2011 to 321 days in January 2012. PNC Financial Group was third, taking 353 days, though the bank takes longer than it did a year ago when it took 206 days. Wells Fargo came in fourth (385 days). Bank of New York Mellon took the fifth longest time frame (402 days), followed by Bank of America (403 days) and SunTrust (404 days). Recently, Fannie Mae and Freddie Mac announced new guidelines to take effect in June requiring servicers to respond within 30 days after receiving a short sale offer or a borrower application. In terms of pricing, Fannie Mae, Freddie Mac, and FHA sold homes for the least amount in January 2012, averaging $128,642, a drop from year-ago prices in January 2011 when they averaged $160,982. Deutsche Bank's average price was $132,996, followed by SunTrust Banks ($144,024), CitiGroup ($148,411), and PNC Financial Group Inc. ($149,332). Bank of America and Wells Fargo were the bottom two on the top 10 list, averaging $158,632 and $167,371, respectively, for January 2012. As for the number of short sales, Bank of America completed the most in January 2012 with 5,276, followed by Chase (2,967), Wells Fargo (2,788), MERS (1,429), and Bank of New York Mellon (1,401).

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