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Tuesday, September 23, 2014
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Published: Tuesday, 7/22/2014 - Updated: 2 months ago

METRO TOLEDO

Foreclosures surge nearly 100% locally in June

Decrease in short sales may be part of cause

BY JON CHAVEZ
BLADE BUSINESS WRITER

After seemingly being on a downward trend for most of the year, foreclosures in metro Toledo surged in June, according to new figures from California real estate data firm RealtyTrac Inc.

A total of 920 housing units moved into some state of foreclosure in June in the metro area, an increase of nearly 100 percent compared with the same month a year ago when there were 461 units in the foreclosure process.

And compared with May, foreclosure activity was up 149 percent, according to RealtyTrac. There were 370 housing units involved in foreclosure proceedings in May in metro Toledo, which includes Lucas, Fulton, Ottawa, and Wood counties.

Foreclosure activity includes default, notice of default, lis pendens, auction, notice of trustee’s sale, notice of foreclosure, and bank-owned properties.

The biggest reason for the jump was activity in Lucas County. Foreclosure activity in June rose 176 percent to 823 housing units compared with a month earlier in Lucas County. The May total was 298 units.

Lucas County foreclosure activity was up 122 percent from a year ago, when there were 371 units involved in the process.

Re/​Max Masters broker Jon Modene, who specializes in foreclosed properties, said such a jump in foreclosure inventory was unusual and that it was hard to say what had caused the surge in activity.

However, Mr. Modene, whose office is in Perrysburg, said what could be fueling the surge is a huge drop-off in short sales — a transaction in which the proceeds from selling the property fall short of debt secured by liens but the lien holders agree to accept a decreased amount.

Prior to Jan. 1, short sales were not subject to sales tax, but now they are.

So if a seller and his bank agree to sell a house for $40,000 less than the seller owes, the seller not only gets no money from the sale — the bank gets the money — but is taxed on that $40,000 “gain.”

“There’s now a disincentive to do a short sale. You do a short sale, you get a tax bill,” Mr. Modene said.

“So nobody is doing short sales anymore. People are staying in the house and … giving the banks back the house,” he said.

“The banks are sitting on inventory. So they have the ability to push the [foreclosure] numbers forwards or backwards.

”You maybe are seeing the fruit of that, which is zero short sales six months” after the law changed, Mr. Modene said.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.



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