Magazine article Mortgage Banking

Black Knight Finds Better Recoveries from REO Sales Than Short Sales

Magazine article Mortgage Banking

Black Knight Finds Better Recoveries from REO Sales Than Short Sales

Article excerpt

>> The December edition of the Mortgage Monitor report from Black Knight Financial Services, Jacksonville, Florida, found in a study of liquidation options for properties facing foreclosure that gross real estate-owned (REO) sales prices were better for recovering unpaid balances.

Trey Barnes, Black Knight's senior vice president of loan data products, reported that after studying results using the company's new Resolution Module, they found that gross REO sales prices over the past two years have made up a higher percentage of corresponding unpaid loan balances due to increasing home prices nationwide.

Barnes said, "The most recent data shows that since Q4 2012, lenders have been recovering greater gross percentages of UPB [unpaid principal balance] through REO liquidations than through short sales, reversing a trend that held true throughout the housing market's crisis years."

He noted that on average, REO properties are selling for 71 percent of the corresponding loans' defaulted unpaid principal balance. That compares favorably with the 65 percent for short sales.

Barnes added, however, that the recovery rates for REO sales and short sales "pale in comparison to third-party sales at foreclosure auction," where the average gross sales price is 116 percent of unpaid principal balance. …

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