by Robert Williams, Publisher
Tuesday, December 22, 2009

Fannie Mae (FNM), which facilitates the lending of almost one in four U.S. residential mortgages, says the recent 11% jump in home sales is proof-positive that the three-year housing slump may end in 2010.

The reality is that we have a ton of excess inventory to burn off before any meaningful recovery can commence.

But here’s a good start…

Rather than further embrace the loser’s game of foreclosure, banks are increasingly entering into short sales, where they accept a sale for less than the balance owed on a property…

“It’s finally dawning on the banks that they’re better off with a short sale,” said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California. (Foreclosed homes can sit vacant for months. And they’re easy targets for vandals.)

Short sales tripled to 40,000 in the first six months of 2009. Yet, for each short sale there were still 25 foreclosures.

What’s holding the number of such sales down, however (and you’ll love this), is that bank employees have no short-sale training. I mean, who ever heard of a bank losing money on a mortgage?

Wells Fargo, Bank of America and JP Morgan Chase are all adapting to the new reality by hiring more staff with proper short-sales training. The fact that banks are willing to accept these sales should limit the housing market’s downside in the year ahead.

Alexander Green knows the housing market better than anybody. And he’s got a way to parlay the present situation into your dream home.

Ahead of the tape,

Robert Williams

View original at: Investment U

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