WSJ: Delayed Foreclosures and “Shadow” Inventory
From Ruth Simon and James Hagerty at the WSJ: Delayed Foreclosures Stalk Market
… Legal snarls, bureaucracy and well-meaning efforts to keep families in their homes are slowing the flow of properties headed toward foreclosure sales, even when borrowers are in deep distress. … some analysts believe the delays are … creating a growing “shadow” inventory of pent-up supply that will eventually hit the market.
…
Ivy Zelman … believes three million to four million foreclosed homes will be put up for sale in the next few years. The question is whether the flow of these homes onto the market will resemble “a fire hose or a garden hose or a drip,” she says.… “We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running” for a loan modification or other alternatives, says a Bank of America Corp. spokeswoman. Foreclosure sales had dropped to “abnormally low” levels in response to government efforts to stem foreclosures, she adds.
The foreclosures are coming. How many and when is the question. But based on the comments from the BofA spokeswoman, it sounds like foreclosures will “spike” in Q4.
Read more at WSJ
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
A true recover will not begin until jobs are created and the jobless are back to work.