There are a number of reasons why foreclosure inventory will continue to mount; however, as stated by the other posters below, do not expect a flood. REO Shadow Inventory does in fact exist, the 5 main causes of which I cover in detail here:
Yesterday I finished a quick follow-up to the post above that specifically addresses one of the main reasons of REO Shadow Inventory: an ineffectual loan mod program. Anyone looking to run the Gauntlet of a Loan Mod will find it very informative and eye-opening:
An increase in Short Sales does not necessarily mean an increase in foreclosures for an area. An in-demand area, such as Pleasanton, will absorb this supply. Case in point: the most recent distressed property data indicates the following for Pleasanton (as of 1/29/10):
Detached Homes (active): Short Sales: 13 (13%) - REO: 5 (5%)
Detached Homes (pending): Short Sales: 50 (53%) - REO: 6 (6%)
Attached Homes (active): Short Sales: 19 (59%) - REO: 4 (13%)
Attached Homes (pending) - Short Sales: 26 (67%) - REO: 5 (13%)
So, from a listings and sales perspective, Short Sales are predominant.
There are several companies who had deals with Fannie Mae insuring a guarantee of 80% of the original value once the companies have reached a certain loss point.
This has been one of the reasons we have started to see more foreclosure sales in the past few months. Many of these homes have notices of default already filed but have been on waiting lists for 8,9 & 12 months to get modified.
There are more short sales now because the banks have sped up the process and are more open to them than they have been. There has been talk about a new wave of foreclosures, but it's hard to know, we have certainly seen a drop off of them in recent months. I think it is going to depend on the area mostly.
Erica Jones Starkey
JSCA Real Estate Group
Providing Superior Solutions for Your Individual Real Estate Needs
I believe we will be facing this market for a while.
We are not done with the Neg am loans. I believe we have at least 2 more years of neg ams exploding, as well as homeowners loosing their jobs etc.
Currently we have a small inventory, I believe it has a lot to do with the buyers credit. Once that is done we will face more short sales and reo's.
I do believe lenders are trying to work with homeowners to keep thier homes. I have successfully been doing Loan Mods for over 2 years.
Best of luck.
925 699 5041
They wrote off alot of losses in 2008, in 2009, Feds said they can change their accounting methods. See the web reference for more details.
The current market conditions, including sale trends were posted just yesterday at http://vickiesellshomes.com/category/pleasanton-ca/market-da
This report shows market dynamics over the last 12 months. On the same site you'll find monthly short sale reports and archives.
Please contact me with any detailed questions.
Vickie Nagy, Keller Williams, CA DRE # 01363932