U.S. sees spike in short sales
09/27/2010
By Credit.com Staff
Distressed homeowners with few debt relief options are turning to short sales in greater numbers as a means of avoiding foreclosure and long-term credit score damage, according to the Washington Post.
Short sales allow homeowners - generally those with underwater mortgages - to sell their home for less than what is owed on the property. Lenders who agree to short sale transactions generally forgive the remainder of the mortgage debt. Although short sale transactions were not well-known before the subprime crisis, the number of borrowers opting for this option has risen significantly.
Citing data from research company CoreLogic, the Post reports short sales have nearly tripled since 2008. Analysts say homeowners are likely moving toward short sales because they will not impact their credit score as heavily as a foreclosure.
"I worked hard for a long time to keep my credit score close to perfect, and I know a foreclosure would be much worse for my credit than a short sale," homeowner Leanna Harris told the Post.
The most recent data from RealtyTrac shows foreclosures filings have increased as lenders work more quickly to run through a backlog of defaulted accounts.
