Recently Dan Prud'homme and I attended training Florida to become Certified Distrissed Property Experts. This is one of the most highly regarded certifications in the area of distressed sales. Our goal is to offer our clients that are experiencing distress with advice they can count on and counsel them through a difficult time. With the growing number of homeowners becoming distressed, Short Sales are growing in popularity.

Many people are unaware of what a Short Sale actually is and unfortunately there is a significant amount of misinformation surrounding the topic. A Short Sale is considered when a homeowner is experiencing some form of hardship and the homeowner is making a concerted effort to sell their home and avoid foreclosure. The term "Short" describes the fact that the homeowner is actually selling the property for less than what is owed on their mortgage. The homeowner is unable to come up with the difference and therefor requires that the bank cooperate with them on the difference. In other words, any offers that are presented on the property are subject to 3rd Party/Bank Approval.

There is a very defined process for submitting a short sale properly to ensure the greatest possibility for cosumating a sale. Each bank is different and may require different levels of documentation, but one common thread runs through all of the banks...they want to ensure that the property is being sold at or at least close to market value. The bottom line...Short Sales can be a great opportunity for the buyer as well as a great opportunity for the seller to avoid foreclosure. Are there implications to a seller under the terms of a Short Sale? Absolutely, but most would argue that the implications are far less severe than Foreclosure. In fact, a foreclosure will remain on a person's credit report for 10 years or more while under a short sale scenario there is no category for Short Sale on a credit report and the balance is typically represented as "Paid in Full" or "Settled."

People are constantly seeking advice and information relative to what's happening with distressed market sales. Unfortunately the numbers are gloomy to say the least. Distressed sales are still making up a very large portion of our market activity/sales. The percentage of Prime mortgages (High Quality Loans representing the lowest risk of default to the lender) in distress is increasing at unprecedented levels.  When we begin seeing more and more low risk borrowers in default it is a strong indication that distressed sales are here to stay for the foreseeable future.

With every month that passes we are confounded by the mounting foreclosures and short sales locally in our market and nationwide. Below you'll find the June statistics for the percentage of homeowners in one of two categories 1. The Foreclosure Process and 2. Default. The numbers are broken out for different categories of Loans as well. Prime being the highest quality/lowest risk loan, Sub-Prime being low quality or higher risk to the lender, VA Loan (Loans guaranteed to the lender by the Veteran's Administration with little to no money down and FHA Loan (Insured by the Federal Housing Authority with as little as 3% down).

<strong>PRIME MORTGAGES:</strong>

2.49% in Foreclosure

6.06% in Default

Total: 8.55%

<strong>SUBPRIME MORTGAGES:</strong>

14.34% in Foreclosure

24.95% in Default

Total: 39.29%

<strong>FHA MORTGAGES:</strong>

2.76% in Foreclosure

13.84% in Default

Total: 16.6%

<strong>VA MORTGAGES:</strong>

1.93% in Foreclosure

8.21% in Default

Total: 10.14%