Foreclosure Home Inventory Shortage

September 29, 2009


Foreclosure home inventory has dropped drastically in the last few months.  Those of us who are continuously making offers on properties will tell you that within hours there are multiple offers on every REO that pops up as a foreclosure listing in the MLS.   The selling price ends up being much higher than the listing price, and sometimes these bank REOs don’t even appraise for the final amount offered.   Want to know why there’s such a lack of foreclosures and REOs on the market?  Take a look at the chart below – the banks are NOT foreclosing on the delinquent mortgages, so they don’t have that many to sell!

Banks hold record delinquent mortgages

September 29th, 2009, 1:00 am ·  posted by Mathew Padilla in Orange County Register

The ratio of first mortgages 90-days late in Orange County rose for the seventh straight month in July, hitting 6.7% of all loans outstanding. That’s the highest percentage since at least January 2007, when it was a mere 0.7%, and is up slightly from 6.6% in June, reports First American CoreLogic.

The percentage of mortgages here with some type of foreclosure filing rose to 2.4% in July from 2.3% in June and 1.6% in July’08.

However, the ratio of bank-owned properties (REOs) held steady for the fourth month at 0.4%.

I am guessing banks are delaying foreclosures as they try loan workouts and see who qualifies for the Obama administration’s loan modification plan. Most folks 60-days late nationwide are not getting trial modifications under the plan, data have shown.

Loan mods outside the Obama plan have a re-default rate in the range of 50% to 60%.

Note: First American released July’s delinquency figures earlier this month, but I just received their revised historical data. So here’s an updated chart showing 90-day lates, loans with a foreclosure filing (FF) and REOs going back to January 2007:

+ARticla CHART

Foreclosure Home Statistics

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