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Lenders Warming Up to Short Sales in Florida

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By : John Cutts    99 or more times read
The number of completed short sales has risen in several parts of Florida in 2010. According to analysts, the reason has more to do with the condition of the market rather than the guidelines issued by the U.S. federal government last year. In addition, lenders who used to be mostly uncooperative are now realizing that short selling properties actually benefit them.

Although bargain foreclosure homes in Jacksonville and other areas of the state remain in high supplies, a lot of property buyers have become reluctant to purchase foreclosed houses since the documentation controversy last year. According to analysts, a lot of these property buyers are worried that the transaction will be canceled due to further investigations and that questionable documents might be involved in the deal.

The decline in buyers' interest on Florida foreclosure homes led to more lenders approving short sale transactions. Lenders have also come to realize that they can unload real estate more quickly this way and can earn as much as $50,000 more for every sale than selling through a foreclosure. For the part of the homeowners, this is one way of getting out of homeownership trouble, especially if the mortgages they are holding cost more than the value of their properties.

Short sales have been largely supported and promoted by the federal government since the start of the housing crisis, mainly because they help reduce the inventory of unsold residential properties nationwide. However, the initial introduction of these transactions proved to be unpopular, particularly among lenders and buyers. For one, closing a short sale transaction can take a lot of time, and buyers often walk away after getting frustrated with the long wait.

Lenders, on the other hand, were initially reluctant to allow short selling of troubled properties, thinking that they will lose a lot of their money if they did. However, as the prices of bargain foreclosure homes decline to record levels, lenders started to realize that short selling will provide them with higher returns than foreclosures.

To attract more lenders and homeowners into considering such transactions, the Treasury Department introduced the Home Affordable Foreclosure Alternative in 2010. This initiative included instructions designed to help lenders and homeowners conduct short sales. Market observers are predicting that short selling will become even more common in 2011.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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