The Real Deal Miami

Short sales one, but not always best answer

A rise in mortgage defaults is causing more lenders in South Florida to choose short sales, selling homes for less than their mortgage balance. The lender limits its legal fees and carrying costs of owning the home, but must absorb the cost of the shortfall. They can also be deterred by the significant amount of documentation required and the related processing costs. In a short sale, lenders lose an average of about 19 percent of the loan amount, compared with an average of 40 percent through a foreclosure, and a lender’s cost to own a foreclosed house often is about 1 percent of the property value, excluding depreciation.