CoreLogic | Black & LoBello

CoreLogic Report Finds More Distress in Distressed Home Sales

CoreLogic, a California-based research firm has released its inaugural report, a bimonthly study entitlted U.S. Housing and Mortgage Trends which states that we will be seeing “more distress with distressed home sales.” CoreLogic defines distressed sales as short-sales and REO sales.

The report claims this is primarily due to the impending expiration of the federal First Time Home Buyers’ Tax Credit on September 30th. Now that this incentive has run its course, CoreLogic says the share of distressed sales is expected to rise in the fall.

The peak of distressed sales was seen in early 2009, at 35% of overall sales. The low was seen in June 2010 with distressed sales making up 24% of the nationwide market.

Unfortunately for us, as of June 2010, Las Vegas leads the nation in distressed sales at a whopping 61% of total sales. In addition to the negative effects of the post-tax credit environment on overall sales, negative equity will continue to be a major factor slowing the recovery of the housing market, with nearly one in four homeowners being underwater nationwide.

Tiffany N. Ballenger, Esq.

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Despite the mortgage industry’s recent decline in fraud risk, CoreLogic reports that 1 in 200 home loans still contain misrepresentations that could result in default. Short sales have also become an area of concern due to their growing popularity as a preferred foreclosure alternative. CoreLogic reports that short sale volume from the first quarter of 2008 through the fourth quarter of 2009 increased by more than 300 percent. Nearly 1 in every 200 short sales were deemed “very suspicious” by lenders, meaning there was a new sale transaction less than 60 days after the short sale and the sale price was more than 20 percent higher than the short sale price. Lenders identified income misrepresentation as the most common type of fraud, followed by internal fraud. Also ranking high were falsifications related to borrower identity, occupancy, and the property itself.