Columbia SC Foreclosures Shifting to Short Sales

Columbia SC foreclosures are slowing as banks are increasingly turning to so-called short sales to avoid the lengthy process of selling properties they once only sold by foreclosures.

The foreclosure process slowed sharply in many states that require courts to review home seizures after a barrage of legal challenges to the process lenders use to seize homes. As those backlogged cases work their way through the system, the pace has picked up again. In many so-called non-judicial states, like California and Arizona, where there have been fewer cases backlogged, the number of foreclosure starts has declined.

The loss of homes remains highly concentrated in a handful of hard-hit states and cities, including Columbia SC.

Columbia SC Foreclosures Shifting More to Short Sales

In a short sale, a lender agrees to accept less than the full mortgage balance when a home is sold. The process saves the lender the cost of maintaining and reselling a foreclosed property.

The decline in the pace of Columbia SC foreclosures also comes as five of the biggest U.S. lenders — Bank of America Corp, Wells Fargo & Co, JP Morgan Chase & Co, Citigroup Inc and Ally Financial Inc — ramp up alternatives called for in a landmark $25 billion settlement with states reached in April. Last month, the monitor overseeing the settlement reported that those lenders provided $10.6 billion mortgage relief in the first four months of the program, most of which represented approval of short sales.

Attorneys general in the 49 states that negotiated the deal had hoped the settlement would prod more lenders to modify loans and write down principal balances for underwater homeowners. The pace of principal write-downs has also been slowed because the federal regulator overseeing Fannie Mae and Freddie Mac has refused to allow the write-downs. Fannie and Freddie hold more than half of all residential mortgages.