Banks in Arizona shift to short sales

After more than 175,000 foreclosures in metro Phoenix in the past several years, mortgage lenders in Arizona have done an about-face, approving a record number of short sales. Rather than taking back homes and selling them at auction, bankers say, they are more frequently allowing distressed owners to sell the homes for less than the borrowers owe. The trend could lead to rising sales prices, because short sales in metro Phoenix tend to sell for higher prices than homes taken back by lenders and resold. It also probably means fewer empty homes across the region, or at least more homes that are now owned by investors who are fixing them up to resell or rent. "Lenders don't want to foreclose in Arizona anymore. They want to do short sales," said Steve de Laveaga, senior vice president of Fidelity National Title, who led a panel discussion with lending executives at an industry forecast this week. Each short sale is still a case of a borrower losing a home, but the impact of a short sale is less damaging for both the housing market and the homeowner's credit. The consensus among lenders and housing-market experts at the standing-room only event Thursday was that short sales would continue to climb in the Phoenix area and foreclosures would continue to fall. The trend could lead to a rise in the median home value as soon as next year, because it decreases the number of homes sold for bargain prices at auction.

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