Fannie Did Almost 40,000 Short Sales Last Year

Fannie Mae completed nearly 40,000 short sales and deed in lieu transactions in 2009, up from 11,700 in the previous year, according to the mortgage giant. "We have increasingly relied on these foreclosure alternatives as a growing number of borrowers have faced longer-term economic hardships and home price declines have increased the proportion of borrowers with negative equity," Fannie said in releasing its 2009 annual financial report. The GSE completed 36,970 pre-foreclosure sales or short sales and 2,650 deed in lieu (of foreclosure) transactions last year. A short sale allows the borrower to sell the property and walk away debt free. It is generally understood that a short sale results in a 20% higher price than a sale of a foreclosed property (real estate owned). In the fourth quarter, Fannie said REO sale prices averaged 56% of the unpaid balance of the mortgage. In a deed in lieu transaction, the borrower simply turns the keys over the lender/servicer. The property ends up as REO. Fannie took over 145,600 foreclosed properties in 2009, compared to 94,650 REO in 2008. The GSE, which is in conservatorship, had 86,150 REO properties in inventory as of December 31.