Paul Krugman is simply wrong when he says that the mortgage lending industry doesn’t want to do short sales.
According to the October 2010 report issued by the U.S. Department of Housing and Urban Development earlier this month (Click here), 18,700 short sales were reported for July (the most recent numbers available). Even more impressive: HUD reported that mortgage modifications –which allow homeowners to stay in their homes — exceeded both short sales AND foreclosures: 115,800 proprietary modifications (permanent modifications done outside of the HAMP program) were reported HOPE NOW in August.
Going back to 2007…10.7 million HAMP modifications, proprietary modifications, and other workout plans have been completed by the industry to keep people in their homes. (See page 3 of this chart.) Short sales are just one of the options available to homeowners and something that is almost always considered when a homeowner can’t afford to stay in her or his home even with a modification.