Short Sales Are Hot but They Also Incur Risk, Loss

[Eric M.]

This is another good short sale article entitled Short Sales Are Hot but They Also Incur Risk, Loss" from Mortgage Servicing News. Requires log-in...but free.

Some good bits:
-400K Short Sales a year. Over half in the big 4 FC states.
-"...short sale fraud related lender losses are $310 million annually. At 1.9% the risk of such "unnecessary losses" occurring in one in every 53 short sale transactions is estimated at an average of $41,500 per transaction."
-"the primary objective for lenders is to eliminate unnecessary loss."
-"..the exact definition of what constitutes fraud continues to evolve."
-"....lenders are consistently incurring more loss than necessary if a short sale transaction was part of an egregious flip..."
-"investor-driven short sales is turning out "necessary liquidity"
-"CoreLogic identifies as risky to the lender two cases of short sale transactions. First, when the second sale amount is vastly higher than the short sale amount, or when the two sale transactions are executed within a very short window of time."

http://www.mortgageservicingnews.com/msn_features/short-sales-hot-but-risky-1020162-1.html?ET=mortgageservicing:e119:21590a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=MSN_Bulletin_081010

[Scott Hubbard]

Mortgage Fraud is simply a buzzword used by industry participants who profit from the REO side of the business. A reduction in REOs is money left on the table and they will do whatever they can to paint a bleek picture. Fact is, it is nearly impossible to put a value on "mortgage fraud" without first determing what it is exactly. Since they cannot define what exactly constitutes fraud, then how CORE LOGIC came up with the numbers it did is a mystery.

One number which is true 20%. That is the percentage of mortgages under water. This does not even take into account closing costs and commissions. So, when the mortgage industry cries "foul" I say where were the gatekeepers when we needed them? Now they are suddenly concerned about a small percentage of investors carving out a piece of the pie?