Short sales and Foreclosure leverage.

Craig Focardi of the Tower Group estimated that it coses a bank $58,759 and 18 months of time to complete a foreclosure.

Although banks are taking a long to time to accept short sales - part of a good negotiator might remind the bank;

In a declining market every month they wait makes the property less valuable;
The lender will have attorneys fees;
The lender may see an slower less liquid market with less buyers;
The bank will tie up capital in the ownership of the property and spend money, maintaining the property, paying homeowners fees and taxes.

Banks are between a rock and a hard place, if they have done a lot of lending in an area, accepting short sales or lower prices may jeopardize the security of their other loans, but if they don't face the music they could end up even worse.

Foreclosure and Short sales Sarasota

The Manatee Herald Tribune reported this morning that delinquencies were up 70% in Sarasota and Foreclosures were up 104%. Apparently homeowners are not concerned about their taxes when they are upside down.

The area hardest hit is North Port with between 141 and 261 foreclosures

Stages of a Foreclosure

Here is a quote from RSImedia.com.

The stages of the foreclosure process include:

- Stage 1 Pre-foreclosure filing: The initial notice that the property is now in foreclosure for an unpaid secured lien or loan.
- Stage 2 Auction filing: The notice that the public court house auction sale date has been set because the unpaid secured lien or loan remains unpaid. Some states, like Arizona, combine Stage 1 & 2 into one notice, and are reported Stage 2 only.
- Stage 3 REO (real-estate/bank owned) filing: The notice that the foreclosure has gone to auction and the property has transferred to the winning bidder or reverted to the lender. The home owner has lost their house to foreclosure.

Recently when speaking with a few Real Estate agents. I realize some do not remember the 90s when it seemed everyone knew what an REO was. Perhaps the crisis will not be over till everyone one knows what an REO is again.

Of course if the banks are smart instead of foreclosing in places like Sarasota and San Diego they will encourage short sales.