May 25, 2011, Santa Ana, Calif. ‒
— Potential Losses Expected to Exceed $375 Million in 2011 —
CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today announced the release of its 2011 Short Sale Research Study, “CoreLogic Analysis on Short Sale Trends, Risks, and Opportunities.” The study was designed to take a rigorously scientific, data-driven look at current trends in short sales and to identify inherent risks and opportunities associated with these transactions.
“Suspicious” short-sale transactions are those where a lender may have incurred unnecessary losses due to the short sale transaction quickly followed by a resale transaction for a substantially higher price where that higher price is not supported by an underlying increase in property value. The focus of the study was to quantify the potential losses associated with these suspicious short-sale transactions.
“Short sale volume has tripled in the past two years, and with approximately 1.7 million seriously delinquent loans, I expect volume to grow again in 2011,” said Craig Focardi, senior research director, consumer lending at The TowerGroup. “Identifying risk and monitoring distressed asset sale trends is absolutely essential for lenders to preempt potential losses.”
“This study reveals that short sales that show another sale transaction closing on the same day account for 16 percent of all suspicious short sales in the industry. These same-day resales are on average $50,000 greater than the lender agreed upon short sale price,” said Tim Grace, senior vice president of Product Management and Analytics at CoreLogic. “The study also validates an industry perception related to Limited Liability Company buyers in short-sale transactions: while they comprise only two percent of all buyers, they comprise more than 25 percent of buyers in suspicious short-sale transactions. The CoreLogic Mortgage Fraud Consortium provides a unique forum for lenders to share real-time data about pending and closed short sale transactions – offering a national, industry-wide perspective that is essential in identifying the suspicious short sales transactions for lenders and servicers before they occur.”
CoreLogic 2011 Short Sale Research Study Highlights
Following are key findings from the study:
It is estimated that lenders, servicers and investors may incur potential losses in excess of $375 million in 2011 due to suspicious short sale transactions. This is up more than 20 percent from $310 million in estimated losses for 2010. Rates of suspicious transactions are on the rise. In the first half of 2010, approximately one in every 52 (1.9 percent) short sale transactions appears to be suspicious, wherein the lender may have incurred unnecessary loss.
Some of the states with the largest short sale volume (California, Arizona, Colorado and Florida) are now the same states with the highest rates of suspicious short-sale transactions. This convergence results in maximum negative impact on the industry.
Consortium analysis and reporting are necessary to mitigate risk and fully leverage data and experiences across multiple lenders.
For the study, CoreLogic examined over 450,000 single family residence short sale transactions completed in the past three years. In addition, the company accessed its proprietary repository of empirical mortgage loan data available for risk analysis, which is owned by CoreLogic and contains over 90 million historical loans from lenders throughout the country, including confirmed and suspected fraudulent loans. The breadth of this CoreLogic-owned data covers 65 percent of the origination market including Federal Housing Administration (FHA), conventional, jumbo and prime lending, making it the largest database of its kind in the nation. This large collection of historic and current data provides CoreLogic with the unique ability to analyze segments of transactions, such as short sales, with tremendous precision.
To obtain a copy of “CoreLogic Analysis on Short Sale Trends, Risks, and Opportunities,” visit http://www.corelogic.com
CoreLogic (NYSE: CLGX) is a leading provider of consumer, financial and property information, analytics and services to business and government. The company combines public, contributory and proprietary data to develop predictive decision analytics and provide business services that bring dynamic insight and transparency to the markets it serves. CoreLogic has built the largest U.S. real estate, mortgage application, fraud, and loan performance databases and is a recognized leading provider of mortgage and automotive credit reporting, property tax, valuation, flood determination, and geospatial analytics and services. More than one million users rely on CoreLogic to assess risk, support underwriting, investment and marketing decisions, prevent fraud, and improve business performance in their daily operations. Formerly the information solutions group of The First American Corporation, CoreLogic began trading under the ticker CLGX on the NYSE on June 2, 2010. The company, headquartered in Santa Ana, Calif., has more than 10,000 employees globally with 2010 revenues of $1.6 billion. For more information visit www.corelogic.com.
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