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Short sales spur moving activity

August 11, 2010 - The volume of homes that are sold via short sale is on the rise, which could indicate that many more homeowners are relocating to avoid foreclosure.

Short sale volume has tripled since 2008, according to a study by real estate data firm CoreLogic. About 400,000 homes are sold for less than what is owed on the mortgage every year, with signs indicating that short sales will continue to be an important part of the mortgage industry in the immediate future. These types of transactions are a preferable option over outright foreclosure, but they do carry a level of risk for lenders, with about $310 million in unnecessary losses incurred each year by mortgage providers, said the report.

"By definition, short sales constitute a financial loss to lenders but will continue to be a necessary part of the mortgage industry as it seeks stabilization," said CoreLogic's senior vice president of fraud analytics, Tim Grace.

Several states, like California and Florida, dominate the short sale market, said the report. Homeowners in these states who can't afford their mortgage may want to consult their lender. Selling their home via short sale and moving could be a better option for them.

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