Cure Rate

You're going to start hearing this term a lot more. It refers to the number of home owners that are delinquent on their mortgages that find a way to cure the problem and continue to make their payments. That rate has been about 45% from 2000 to 2006 for prime mortgages. This has caused banks to not be very negotiable on short sales. Short sales are where the bank agrees to let the owner sell the home for less than they owe the bank for it. The bank usually forgives the difference. Banks have been reluctant to agree to short sales because they figure that most home owners will find a way to make that payment before they have to go into foreclosure. Moreover, the banks have insurance on the loan through private mortgage insurance that they only collect if they foreclose. They don't get the insurance if they allow a short sale. Recently however, the cure rate has dropped dramatically to about 6.6%. Less and less home owners are managing to find a way to stay afloat. Hopefully, this will encourage the banks to speed up the process on short sales. I have one that I've been helping a buyer purchase that we started on in mid-April.