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Even though the mortgage marketplace is not truly a free one per se, its participants are frequently able to find ideas that work in emergencies, and that's what happened with short sales. the Currency. They showed a huge 19.7 percent increase from Q1 2011 to Q1 2012, moving from around 50,000 to about 60,000 successful transactions. This year's second-quarter numbers are not available as of this writing, but the trend is undeniable. Why are short sales increasing so substantially after years of being regarded as a nuisance by most in the business, and why do so many people regard their success as the solution to the foreclosure crisis? There are layers of complexity to the questions and even more to the answers, but here are some reasons why short sales came into their own: Honing In on Short Sales After putting them on the backburner as tactics of last resort, servicers were "encouraged" by the government to prioritize short sale offers. They are required to acknowledge them with a response within 30 days, but in fact have gone far beyond simple replies. When presented realistically and backed up by data and market intelligence, offers get faster attention from servicers and the processes leading up to the handling of short sales have also become more systematic and refined. Intermediaries like special and component sale, and in the background I was listening to the homeowner and her children crying. It is hard and some days I leave work in the worst mood." Clearly there is plenty of stress to go around. Tech Appeal Technology played a big role in improving the acceptance of short sales. RES.NET, for example, which created a Web-based communications network for buyers, sellers, servicers, and other stakeholders throughout the real estate space, has seen a big rise in the use of its online short sale platform. Angela Hurst, RES.NET's SVP of settlement services, notes that usage of the company's platform has skyrocketed since the first of the year. "Short sales do best when the parties involved have full transparency into the process and when the audit controls so crucial to today's bankers are available," she said. "Technology has made a great difference in the success of short sales." John Vella, COO of Equator, is justifiably servicers have earned a share of the credit for this development, being in the unique position to understand both sides of the table and scrub and facilitate offers to make them more easily actionable. In this role, special servicers helped create a more viable approach for agents working with short sales and helped warm servicers and investors to them as a workable, loss-minimizing foreclosure alternative. Servicers have more empathy than in years enthusiastic about the contribution of his company's technology in the growth of short sales. "With over 52 percent of all industry short sales having passed through the Equator platform, we have collected an enormous amount of critical data and best practices," he said. "This experience and Equator's technology have allowed our clients to significantly improve borrower satisfaction, compliance, and transactional timelines. The technology-based marketplace of vendors, borrowers, real estate agents, servicers, and investors has made the process much more efficient and viable." past for borrowers' plights, too. It is easy to forget, in the midst of foreclosure statistics and dollar amounts that the people on the other end of the phone are still people. ShortSaleSuperstars.com, a resource for real estate professionals, recently received a post from a short sale supervisor at a major bank who shared, "My first week on this job had me in tears. I was on the phone with an attorney who was trying to stop a foreclosure 52 Short-Sighted Investors With markets seeing the bottom and showing new growth, free market players are putting their money where they see opportunities. Brent Taggart, SVP of client relations at Green River Capital, says investor interest in short sales has never been higher. "They have been timing the market and looking for value," he said. "Investors are carefully monitoring to see when these assets are going delinquent and are working to acquire them through short sales before they go to foreclosure and become REO." Residential real estate will hopefully never overheat the way it did in the first half of the last decade, but it is certainly warming up and moving off investors' back burners. Nullifying Modifying Mentality For going on seven years now, the industry has been pelted with the message that distressed borrowers must be put in loan mods no matter what. The "what" in that message is impactful, and the earliest mass mod attempts were tragically laughable in their failure rate and expense to servicers. It has since become clear that mods aren't for everyone, particularly in the climate of joblessness that is not improving as the Obama administration hoped it would. Without jobs, people are both mistrustful of servicers and reluctant to roll the dice on mods. Borrowers ask, Even if my loan is modified, can I sustain the payments can I keep up with property taxes and HOA fees? Many distressed homeowners are happy to get out from under the crushing pressure and focus on rebuilding their financial health apart from the weighty obligations of owning real estate. Short sales let them take a break, catch their breath, and regroup. Deeds in lieu? Barely a factor even with relocation assistance. There were 1,700 of them in Q1 2011 and they improved to 2,800 in Q1 2012—a 65 percent increase that eloquently shows the meaningless of statistics. Stewards of Short Sales Individual buyers, many of them first-timers looking for a bargain, are finding more success than in previous years, improving the all- important word-of-mouth factor. In workplaces across the country, water cooler stories about outrageous delays and frustrations with short sale offers have gradually morphed into tales of success. Even if the bargains received were not the huge discounts hoped for in the late 2000s, they still represent good deals in established neighborhoods. Investors have come back in numbers, bringing tremendous lift to short sales, and the rental markets responded with a different sort of occupant to fill those homes—former homeowners rather than lifelong apartment dwellers. These former owners, out of their houses through a variety of recession- induced circumstances, prefer the single- family lifestyle, especially when families are involved. It is completely different from the multifamily experience and generally more desirable for adults, kids, and pets once it has been tasted.

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