Although the housing market has been recovering this year, it appears that foreclosures may still be an issue.
According to RealtyTrac's Q3 U.S. Foreclosure & Short Sales Report, a total of 193,059 U.S. properties in some state of foreclosure or REO were sold in the third quarter, which is a 21 percent jump from the second quarter. However, this is 3 percent lower than Q3 2011.
Additionally, foreclosure related sales were 19 percent of all residential sales compared to 20 percent in the previous quarter.
One reason that foreclosure sales may have increased in the third quarter is the fear of the Mortgage Forgiveness Debt Relief Act expiring in the new year, RealtyTrac vice president Daren Blomquist said.
"The prospect of being taxed on potentially tens or hundreds of thousands of dollars in additional income may motivate more distressed homeowners to forgo a short sale and allow the home to be foreclosed," he said.
Created in 2007, the Mortgage Forgiveness Debt Relief Act allowed taxpayers to forgo paying income taxes on the amount of their foreclosure that was forgiven in a short sale or foreclosure.
