The article fron Transunion entitled "TransUnion Study Finds Opportunity in Mortgage-Only Default Market" is the first data I've seen that shows what many real estate and mortgage industry participants have known for a long time. People that have good credit take away mortgage lates related to a loan modification or a short sale are much lower credit risks than people that actually let their house go to foreclosure. There are many reasons that may have forced a consumer to move at a time when due to greater macro economic circumstances there home may have been underwater. They could have been laid off and had to find a new job in a new area being a very common cause in our current economy as an example.
I've always said that lenders want to lend, thats how they make money. Once they start reviewing more and more evidence like the Transunion study they will realize that they need to make it much easier for people to buy after a short sale, say 12-24 months. Having a more tangible benefit for conducting a short sale as opposed to a foreclosure will help tremendously with getting short sellers to be cooperative in participating in the short sale process.Posted by Ben Nicolas on