Short sales have been helping cut lender foreclosures in New York City, based on analysis of home sales in the first months this year. Foreclosure postings dropped by 38 percent in May compared to filings one year earlier.
Short sales accounted for 75 percent of all distressed sales in the city in the first three months. Also, the percentage of preforeclosure sales in many areas in Brooklyn, Staten Island, Queens and the Bronx, has risen to about 20 to 40 percent of total home sales in the city, surpassing the 12-percent nationwide average and preventing a substantial number of units from entering foreclosure home auctions in New York.
Real estate professionals said that the inability of homeowners to obtain permanent modifications and the cash incentives given to both lenders and homeowners by the Home Affordable Foreclosure Alternatives program have been pushing a lot of distressed borrowers to avoid foreclosure through short sales.
They figured that if they have to lose their homes, they might as well take advantage of the cash incentives. Short sales would also put a lesser dent on their credit scores compared to the effects of lender foreclosures.
Another significant factor helping short sale completions in New York City is the longer foreclosure cycle in the state, giving more time for lenders and homeowners to negotiate a short sale contract agreeable to all parties. While some states have foreclosure cycles as short as 21 days, the foreclosure process in the state of New York can take 15 months or more.
Based on sales records, more Bronx foreclosure auctions were prevented through short sales, as the Baychester and Morrisania neighborhoods in the Bronx posted the biggest percentage of short sales in the first quarter.
As short sales increased in the Bronx in the first quarter, lender foreclosures also increased in the area in May, giving people looking to purchase foreclosed homes in New York City more buying opportunities in the Bronx.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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