By Lisa Prevost | The New York Times
The expiration of a federal tax exemption for forgiven mortgage debt appears to be scaring borrowers away from pursuing short sales.
New data from CoreLogic, a real estate information service, shows a sharp slowdown in short sales for the first two months of the year.
After peaking at 9 percent of total sales in October 2012, short sales had declined to 5.2 percent by last December, said Sam Khater, CoreLogic’s deputy chief economist. In January, however, they made up only 4.6 percent of sales, a faster pace of decline. And preliminary data for February shows an even steeper drop to 2.2 percent.
While rising home prices are helping to reduce short sales, the quickening pace of decline is likely linked to the Dec. 31, 2013 expiration of the Mortgage Forgiveness Debt Relief Act, Mr. Khater said.
