Are Loan Modifications and Short Sales Decreasing or Delaying Foreclosures?

Santa Clara County has seen an annual decline in foreclosure notices for the past consecutive six months. Yet, Foreclosure Radar reports that these types of declines don’t make any sense. They speculate that lenders may be holding on to the foreclosure inventory longer to avoid flooding the market. There is no evidence to support that these foreclosure numbers are being dramatically influenced by a strong increase in short sales or loan modifications. However, more at risk homeowners are pursuing these options up front and as a result may be delaying the foreclosure process by overwhelming loan servicers with work out requests which require lenders to document the borrower’s earnings and assets.