June 23, 2012
Maybe the banks are starting to figure it out. Instead of dealing with the legal challenges and expense of
foreclosures banks are now approving more short sales, or homes sold for less than the principal
According to David Brownell of Keller Williams Realty of Las Vegas, for the first time since the foreclosure
crisis struck Las Vegas five years ago, short sales closings outnumbered foreclosures in May.
He reported 1,289 short sales closings during the month compared with 1,275 real estate owned or
bank owned closings. Foreclosures accounted for more than half of all existing home sales over the
last few years, while short sales bounced between 20 and 25 per cent. Now they are about even at 32
The shift in sales could be attributed to the robo signing law passed last year which requires lenders
to provide an affidavit of authority to foreclose.
Bownell said, "look for the shift to continue in the coming months, as the momentum for short sales
has been on the increase for many months even before the bill was passed."
"Pressures from all levels of government have encouraged banks to seek other solutions other
"I hate to say it, but are there more foreclosures to come? It is my opinion that the answer is yes, said
a spokesman for Wells Fargo."
The tricky part is getting mortgage investors on board.About 70 percent of Wells Fargo 10 million mortgage
holders portfolio are backed by government sponsored enterprises such as Fannie Mae, Freddie Mac and HUD.
"So, at the end of the day, it's not up to the banks, it's up to the investors to accept a short sale."
Bank of America has completed more than 200,000 short sales in the last two years.
Brownell said that the real estate market has yet to feel the full impact of the robo-signing law.