JPMorgan Chase  completed short sales on 61% of its delinquent mortgage liquidations in 2011, the most of any servicer, according to data compiled by the bank’s securities research group.

As the robo-signing freeze put a hold on the foreclosure process, the largest servicers turned to short sales over REO. By the end of last year, servicers were completing short sales on more than half of their inventory of home loans more than 60 days delinquent or in foreclosure, according to the report. In 2008, short sales took roughly 25% of all liquidations.

According to Chase analysts, short selling a property resulted in an average 56% loss on the loan, roughly 15% lower than an REO sale.

A recent story [4] in Bloomberg detailed how short sales peaked even as a percentage of overall home sales in January.

Analysts at Chase, using the same Lender Processing Services data, broke down which servicers were doing the most.

Following Chase, Bank of America completed short sales on 52% of its liquidations. Ally Financial and Wells Fargo  both did short sales on more than 41% of their resolutions.

Even firms not involved in the robo-signing investigation from the attorneys general turned to short sales. While still under Goldman Sachs  ownership, 43% of Litton Loan Servicing liquidations were short sales, followed by 43% atIndyMac and 39% of American Home Mortgage Servicing, according to the report.

Fannie Mae and Freddie Mac will hold  servicers to stricter short sale timelines beginning in June. The AGs and federal prosecutors installed  similar short sale standards in the $25 billion foreclosure settlement as well. A recent report from RealtyTrac showed 2012 could lead to even more short sales.

Chase analysts project servicers will have to liquidate roughly 2 million loans either through short sale or REO every year for the foreseeable future.

“Given that liquidation is inevitable for so many borrowers, investors in distressed assets should look to servicers who are more aggressive about pursuing short sales, where severities are lower,” analysts said in the report. “In general, there has been a trend of increasing short sales, and the percentage of all liquidations that goes through short sales is over 45% now.”