Metro Toledo had the highest share of distressed sales — 36 percent — among metro areas nationwide with at least 1,000 home and condo sales in the third quarter, a study by a California real estate data firm shows.
Attom Data Solutions of Irvine, Calif., said metro Toledo also had the second-largest discounts, 66 percent, given by banks when they sold property that they repossessed.
Toledo far and away had the highest share of distressed sales in Ohio. Cleveland and Dayton were at 17 percent, Cincinnati at 15.5 percent, and Columbus at 13 percent.
Daren Blomquist, senior vice president at Attom, said the underlying numbers show that Toledo’s high number of distressed sales among 118 metro areas is the result almost exclusively to short sales.
A short sale is when homeowners sell their home for a price less than what they owe on the mortgage. For example, the owner may owe $100,000 but sell the home for $80,000, requiring them to make up the $20,000 difference.
For a short sale to occur, the lender or whomever holds the loan paperwork, must agree to the short sale.
“Toledo is quite an outlier,” Mr. Blomquist said. “What stands out is where we have seen the big increase in distress sales is in the short sales. The other two categories for distressed sales [bank-owned sales, and sales of homes actively in foreclosure] actually went down.”
Mr. Blomquist said that tells him that banks are agreeing to short sales in larger numbers.
When homeowners owe more on their mortgage than the home is worth, it is known as being “underwater.”
In the second quarter Attom figures put the number of home loans in Toledo “underwater” at 24 percent, or nearly one out of four. That was the fifth highest metro area in Ohio for underwater loans; Cleveland was first.
“When we look at the underwater data, it shows that there’s a very high percentage of homeowners in Toledo who are underwater and because that market is not recovering as quickly as others, the banks may have realized it’s a good time to sell even if they have to agree to short sales,” Mr. Blomquist said.
Shane Marzullo, a lender with Greentree Mortgage Services, said many of the underwater homes are in “blue collar neighborhoods” located near closed or repurposed factories.
“When the housing boom was taking place some of those homes were selling for up to $150,000 and now they’re worth nothing close to that,” Mr. Marzullo said. “The owners are having a hard time making their payments so the banks are now willing to take short sales to preserve the homes.”
However, the short sale increases are not reflected in the third quarter sales numbers by the Toledo Regional Association of Realtors. The trade group’s report shows that in the third quarter in Lucas and northern Wood counties, there were 1,622 homes sales, unchanged from the second quarter and from a year ago.
The median sales price in the Toledo area was $119,775 in the third quarter, up 2 percent from a year earlier.
But Jon Modene, owner of Re/Max Masters, and a certified short-sale specialist, said he is seeing more short sales occur. “There are more. More, but not a lot more,” he said.
Three lenders, Fannie Mae, Citibank, and Chase Bank, have all become more willing to do short sales, he said.
“It is more efficient, it is less painful for a bank to take a short sale with an already willing owner than to go through the Lucas County foreclosure process,” Mr. Modene said. “There could be IRS liens on the house that would otherwise interfere with an easy foreclosure and drag out the process.
He said he could envision metro Toledo being the leader in distressed sales again in the fourth quarter.
“I hope not, but I wouldn’t be surprised,” he added.
Contact Jon Chavez at: firstname.lastname@example.org or 419-724-6128.