Short sales top REO at JPMorgan Chase

By Jon Prior

• April 23, 2012 • 10:45am

JPMorgan Chase ($43.18 0.33%) completed short sales on 61% of its delinquent mortgage liquidations in 2011, the most of any servicer, according to data compiled by the bank’s securities research group.

As the robo-signing freeze put a hold on the foreclosure process, the largest servicers turned to short sales over REO. By the end of last year, servicers were completing short sales on more than half of their inventory of home loans more than 60 days delinquent or in foreclosure, according to the report. In 2008, short sales took roughly 25% of all liquidations.

According to Chase analysts, short selling a property resulted in an average 56% loss on the loan, roughly 15% lower than an REO sale.

recent story in Bloomberg detailed how short sales peaked even as a percentage of overall home sales in January.

Analysts at Chase, using the same Lender Processing Services($25.01 -0.48%) data, broke down which servicers were doing the most.

Following Chase, Bank of America ($8.14 -0.045%) completed short sales on 52% of its liquidations. Ally Financial and Wells Fargo ($33.04 0.35%) both did short sales on more than 41% of their resolutions.

Even firms not involved in the robo-signing investigation from the attorneys general turned to short sales. While still under Goldman Sachs ($112.78 1.03%) ownership, 43% of Litton Loan Servicingliquidations were short sales, followed by 43% at IndyMac and 39% of American Home Mortgage Servicing, according to the report.

Ocwen Financial Services ($14.72 0.01%) used short sales the least, completing them on roughly 25% liquidations, because the company was geared more toward modificaitons and REO, according to the analysts.

Fannie Mae and Freddie Mac will hold servicers to stricter short sale timelines beginning in June. The AGs and federal prosecutorsinstalled similar short sale standards in the $25 billion foreclosure settlement as well. A recent report from RealtyTrac showed 2012 could lead to even more short sales.

Chase analysts project servicers will have to liquidate roughly 2 million loans either through short sale or REO every year for the foreseeable future.

“Given that liquidation is inevitable for so many borrowers, investors in distressed assets should look to servicers who are more aggressive about pursuing short sales, where severities are lower,” analysts said in the report. “In general, there has been a trend of increasing short sales, and the percentage of all liquidations that goes through short sales is over 45% now.”


About SanDiegoatHomeTeam
Christian van't Vlie and Ivana Milosevic. Helping sellers and buyers successfully reach their real estate goals while keeping them informed every step of the way, disclosing all known facts and real estate practice procedures so that all involved parties can make well-informed decision. We care and we are at your service.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: