According to the Multiple Listing Service (MLS), lender owned sales represented only 4% of the sales from January through May 2017 in Chisago County, compared to 17% during the same period in 2016.
There have only been 15 lender owned closings this year and 3 short sale closings listed on the MLS out of 349 closed sales, compared to 56 lender owned closings, and 11 short sale closings in 2016.
The median selling price for the traditional sales (non-foreclosure) was up from $220,800 to $225,000, in Chisago County during the same period.
Many factors have contributed the foreclosure decline. The most important being the market recovery; increasing home equity. Most homes are back to their pre-market crash (2008) value. For the most part, lenders stopped making risky loans. The economy is more stable, so there are less job losses. Some of the situations contributing to foreclosure market are divorce; homes that were over improved, and homes that are in disrepair.
Lenders will typically start the foreclosure process when a home owner is 45-90 days delinquent. Minnesota is a non-recourse state, which means in most cases, for owner occupied homes, the property is collateral and if the property is foreclosed the owner does not owe the lender a deficiency balance. Therefore, the lenders are cautious with the appraisal values, down payments, and mortgage insurance to protect their investment.
Because of the lender’s pre-cautions, they are less likely to accept a short sale. A short sale example would be; the mortgage balance is $250,000 and the home owner requests forgiveness of $25,000 to sell it for $225,000. Some of the reasons short sales are down are; the banks no longer want to take a loss if they can sell the property for more than the mortgage balance, there may be a 2nd mortgage, and the 2nd mortgage holder can pay off the first mortgage, and sell the property for a profit, and sellers are less likely to agree to a short sale as they may have to pay taxes on the amount forgiven by the lender.
For advice on selling or buying a foreclosure property, get advice from an attorney and/or an experienced real estate professional.
Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to firstname.lastname@example.org. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.