Home prices are beginning to stabilize thanks, in part, to loan modifications and the increasing use of short sales, according to CoreLogic.
The rate of completed foreclosures has “dropped to the point where the rate of foreclosure resolutions [short sales/modifications] is now outpacing completed foreclosures,” CoreLogic says in its May issue of MarketPulse.
In the first quarter of this year, servicers completed 200,000 foreclosures and 91,000 short sales, up from 81,000 short sales in the prior quarter.
REO sales were unchanged at 166,000 units during the same two quarters.
The firm said short sales comprised 9.5% of homes sold in the first quarter with REO transactions accounting for 17.4% of transactions.
In a short sale, homes generally sell at a 10% discount relative to nondistressed sales, CoreLogic says, and have a less negative impact on home prices than REO sales.
Fannie Mae recently reported that its REO sales net, on average, 57% of the unpaid principal balance of the loan.
