BofA Leads in Short Sales Among Banks

by 20 Apr 2012

(Bloomberg) -- Bank of America Corp., the U.S. lender with the most housing-related writedowns, is allowing the highest number of properties to be sold at a loss as short sales become an increasingly common foreclosure alternative.

The Charlotte, North Carolina-based bank approved 5,276 short sales in January, topping JPMorgan Chase & Co. (JPM), with 2,976, and Wells Fargo & Co. (WFC), the biggest home-loan originator, with 2,788, according to a report today by RealtyTrac Inc. The total number of U.S. short sales, in which properties are bought for less than what’s owed on them, rose 33 percent from a year earlier in January, the latest month for which figures are available, and is expected to set a record this year, the Irvine, California-based data provider said.

“Bank of America has done almost as many as numbers two and three combined,” Charlie Engel, a RealtyTrac vice president, said in an online presentation today. “Combine the top three and you’re looking at the vast majority of short sales right now.”

Lenders are trying to cut mortgage losses as home values are down by a third from their July 2006 peak and almost 12 percent of borrowers are delinquent or in foreclosure, according to the Mortgage Bankers Association. Short sales may reach a record this year, with about 12.5 million homeowners owing at least 25 percent more than their properties are worth, RealtyTrac said.

“Even if these homeowners aren’t struggling to make mortgage payments and therefore are at low risk for foreclosure, if they need to sell sometime in the next five years it’s likely they’ll need to sell via short sale,” the firm said.

Read full article from Bloomberg


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