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Economy

Banks turn to "short sales" in Michigan as home foreclosure rates continue to decline in April

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The number of foreclosure filings dropped 28 percent in April compared to a year ago.

Daren Bloomquist with Realty Trac said a big reason for the decline of homes being repossessed is that banks are turning more and more to "short sales."  A short sale is where a mortgage lender allows a property to be sold for less than the amount owed on a mortgage and takes a loss.

“Based on other data we’re looking at that’s a trend that’s going to continue this year. Short sales are going to become a much more attractive alternative to more lenders," said Bloomquist.

The nation’s five largest mortgage lenders Ally Bank, Citibank, Bank of America, Wells Fargo and JP Morgan Chase have significantly stepped up their use of  "short sales."

Earlier this year the five mortgage lenders agreed to pay $25 billion as part of a national settlement of claims of abuse in the mortgage and foreclosure process.

Michigan is getting about $800 million from the settlement.