The number of homes falling into foreclosure took a jump in New Mexico during May, pointing toward more short sales in the future for the residential real estate market, according a report by Irvine, Calif.-based RealtyTrac.
Notices of foreclosure lawsuits filed in state district courts were sent to 560 homeowners statewide last month, a 27 percent jump from the 472 homeowners receiving a notice in April, RealtyTrac reported. Nationwide, foreclosure starts increased 9 percent from April to May.
April marked a lull in foreclosure activity in New Mexico. The 472 homes entering the foreclosure process was the lowest number since 350 in September 2011.
Foreclosure starts were particularly robust in the fourth quarter of 2011 and first quarter of this year, with the recent monthly high of 818 reached in November, followed by 816 in December. Starts topped 650 a month in January, February and March.
Most of these homes were headed toward out-of-court short sales, which involve a homeowner selling a house for less than what is owed on the mortgage. The lender routinely writes off the difference as a loss.
As of May, there were only 50 homes scheduled for a court-ordered foreclosure sale in New Mexico and another 139 homes in the process of getting repossessed by the bank, RealtyTrac reported. The low numbers are the result of the current trend among lenders to approve short sales.
“While pre-foreclosure sales have less of a negative impact on home values than bank-owned sales, they still represent a discounted sale where a distressed homeowner is losing his or her home,” said RealtyTrac CEO Brandon Moore in a prepared statement.
The average price of a short sale was $27,000 higher than the average price of a bank-owned home nationwide during the first quarter, Moore said.
“More banks are now recognizing that treating the problem of delinquent mortgages with short sales rather than bank repossessions can help them minimize their losses,” he said.
— This article appeared on page B4 of the Albuquerque Journal