The ratings agency DBRS has announced its prediction of decline in Foreclosures in 2013 vs. 2012. This is due to banks increasingly using Short Sales to prevent Foreclosures. More and more banks are using Short Sales as their only method of loss mitigation to prevent mortgages that are behind on payments from going into Foreclosure.
The Office of the Comptroller of the Currency (OCC), a federal government regulator, who regulates all national banks and federal savings associations, issues a report showing the home retention actions was down 36.7 percent from 2011, at the same time, the number of Short Sales jumped up by 19.7 percent.
During the first half of the 2012, a total of 123,399 Short Sales were completed. Based on the data gathered for the first half of 2012, it is predicted that 138,000 Short Sales will be completed during the second half of 2012.
DBRS the ratings agency issues statements saying it is their prediction that Short Sales will be used by more and more banks to reduce their defaulted loans. The benefits of Short Sales for the lenders are 1. No attorney cost on conducting foreclosure 2. No need to maintain the house while it is on the market 3. Homeowners are still in the house to prevent vandalism 4. No additional Realtor commissions 5. No more paying HOA fees and property taxes.
Based on the data and trend, the conclusion is that Short Sale numbers will continue to increase while Foreclosure numbers will continue to decline as a result of the lenders using Short Sale as their primary technique of dealing with defaulted loans.