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Thursday, February 28, 2013 - 7:49am
El Paso — The number of foreclosures is down by four percent, but Texas's rate is up by 11 percent, according to a report released by RealtyTrac.
Experts are saying owners are opting to sell their home for less than their worth, known as short sales. Last year's Mortgage Forgiveness Debt Relief Act may have prompted short sales to rise because the act allows owners out of their unaffordable mortgage rates.
Homeowners often turn to short sales because banks will absorb the negative equity as long as a homeowner can prove financial hardship. Short sales are also a better option for banks because they can sell these homes for a higher prices versus a foreclosure where banks lose a lot more money. The homeowner has to prove financial hardship in order for the bank to approve the deal and forgive the unpaid debt.
The average short sale, according to RealtyTrac, sells for 23 percent less than market price. A foreclosure's average sale sells for 39 percent less below market.
RealtyTrac also says that in El Paso County one in about 5,000 homes received foreclosure filings in January 2013. They also say 43 percent of home sales were foreclosures and short sales in 2012.