(Bloomberg News) U.S. homes in or nearing foreclosure accounted for almost a fourth of residential purchases in the last three months of 2011 as lenders approved more short sales, where the price is less than the amount owed.
Deals for bank-owned and distressed properties rose to 24 percent of total home sales from 20 percent in the third quarter, according to RealtyTrac Inc. The transactions fell from 26 percent a year earlier, the Irvine, California-based data seller said today in a statement.
"We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales," Chief Executive Officer Bandon Moore said in the statement.
Banks may "aggressively" resume unloading distressed property after an 18-month delay brought on by federal and state legal probes into flawed foreclosure paperwork and documentation, Moore said. The fourth quarter showed lenders turning to short sales as a "better option" than holding a house whose borrower doesn't make any payments, he said.
The number of short sales jumped 15 percent from the fourth quarter of 2010 while purchases of bank-owned houses fell 12 percent, according to RealtyTrac. Pre-foreclosure deals outnumbered bank-owned sales in the "bellwether" cities of Los Angeles, Miami and Phoenix, Moore said.
"That trend will likely show up in more local markets in 2012," he said.
A total of 88,303 pre-foreclosure properties sold in the fourth quarter, making up 10 percent of all transactions.
Five of the top U.S. mortgage lenders last month reached settlements worth more than $25 billion with the federal government and all 50 states following investigations into abusive foreclosure practices. The lenders agreed to provide $17 billion in mortgage forgiveness programs, $3 billion in refinancing and cash payments to about 750,000 borrowers who lost their homes.
For the full year, purchases of foreclosures and distressed houses totaled 907,138, down 2 percent from 2010 and accounting for 23 percent of all home sales, RealtyTrac said. There were 204,080 such deals in the fourth quarter, down 8 percent from the previous three months and 2 percent from a year earlier.