Detroit sees surge in home ’short sales’
DETROIT, June 5 (UPI) — Hoping to slow an increase in foreclosures, Michigan lenders have tripled “short sales,” when a home sells for less than is owed on the mortgage, analysts said.
The move is seen as a sign the real estate market in southeast Michigan, including Detroit, could fall back into a crisis, The Detroit News reported Saturday.
In a short sale, a family might owe $180,000 in mortgage on a home in a neighborhood where houses are selling for $140,000. They can ask the lender for permission to sell the home for $140,000 and be forgiven the $40,000 still owed.
Real estate data agency Realcomp II says the practice of “short sales” is on a record pace in the region’s 10 counties, the News reported.
Between January and April 2,284 home sales were short sales, a 171 percent increase from the same period last year, data shows.
Short sales drive down the price of homes, though not as much as foreclosures do, resulting in bargains for buyers but depressed prices for home sellers, the News said.
Adding to the Detroit area’s woes is a growing backlog of bank-owned homes that have yet to hit the market, the News said.
