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50 INSTITUTIONAL INVESTOR SALES DECLINE RealtyTrac released its January 2014 Resi- dential & Foreclosure Sales Report on ursday, revealing institutional investors made up 5.2 percent of all U.S. residential property sales in January. Institutional investor sales are down from 7.9 percent in December, and down 8.2 percent from January 2013. e report clarifies that institutional investors are "defined as entities purchasing at least 10 properties in a calendar year." e January share of institutional inves- tors was the lowest monthly level since March 2012—a 22 month low. Short-sales and foreclosure-related sales, "including both sales to third party buyers at the public foreclosure auction and sales of bank- owned properties," combined for 17.5 percent of all U.S. residential shares in January 2014, according to the company's report. All-cash sales increased to 44.4 percent, the seventh month above 35 percent. "Many have anticipated that the large insti- tutional investors backed by private equity would start winding down their purchases of homes to rent, and the January sales numbers provide early evidence this is happening," said RealtyTrac VP, Daren Blomquist. Metro areas with big drops in institutional investor share from a year ago included Cape Coral-Fort Myers, Florida (down 70 percent); Memphis, Tennessee (down 64 percent); Tucson, Arizona (down 59 percent); Tampa, Florida (down 48 percent); and Jacksonville, Florida (down 21 percent). Counter to the national trend, 23 of the 101 metros analyzed in the report posted year-over- year gains in institutional investor share: Atlanta, Georgia (up 9 percent); Austin, Texas (up 162 percent); Denver, Colorado (up 21 percent); Cincinnati, Ohio (up 83 percent); Dallas, Texas (up 30 percent); and Raleigh, North Carolina (up 15 percent). Blomquist continued, "It's unlikely that this pullback in purchasing is weather-related given that there were increases in the institutional investor share of purchases in colder-weather markets such as Denver and Cincinnati, even while many warmer-weather markets in Florida and Arizona saw substantial decreases in the share of institutional investors from a year ago." EXPIRED TAX RELIEF COULD INCREASE PRESSURE ON TROUBLED BORROWERS e Mortgage Forgiveness Debt Relief Act's (MFDRA) expiration may lead to negative pressure on liquidation timelines and recoveries for legacy U.S. mortgage investors if the act is not renewed, according to Fitch Ratings. Recently expired as of January 1, the MFDRA was signed into law December 2007 with the purpose of aiding underwater mort- gage holders. Fitch Ratings projects a negative effect from the MFDRA's expiration. e act was designed to provide tax relief by allowing certain borrowers to exclude mortgage debt that was cancelled or forgiven by the lender through a foreclosure, short sale, or loan modification—debt that would normally be considered income for tax purposes. Without this relief, Fitch expects a decline in the volume of short sales and prin- cipal forgiveness modifications. e agency cites three reasons for its projection: • Without the tax exemption, there is less incentive for distressed borrowers to agree to a voluntary property sale that will not pay the loan off in full, likely increasing the number of involuntary foreclosure sales. • e MFDRA's expiration provides less incentive for servicers to offer principal forgiveness modifications. e tax burden on the borrower increases the likelihood of redefault. • Servicers may increasingly opt for principal forbearance, which requires the borrower to repay the reduced principal amount at the end of the loan term. Congress is currently considering extend- ing the tax relief through 2015 or 2016. Permanent loan modifications completed by the mortgage industry over the last seven years. Source: HOPE NOW STAT INSIGHT 6.76 Million