Foreclosures waiting in the sidelines have not surfaced as yet
September 9th, 2009
For weeks and months the experts have been apprehensive about the shadow inventory of foreclosed homes but these foreclosures waiting in the sidelines have not surfaced as yet. But when will this surge happen? The question is perplexing all concerned.
The majority of the moratoriums on foreclosure came to an end in March. Since then the pre-foreclosure postings have picked up speed. But the number of bank owned properties in the market have gone down in numbers. This has raised the questions that will these shadow inventories ever hit the market or not.
Sean O’ Toole of ForeclosureRadar.com said, “For those of you still waiting for a surge of foreclosure sales, the truth is you’ll likely be waiting a long time.” He explains the gap between default and listing has become wider as more borrowers are trying to get their loans modified availing of the various schemes being offered by the government. Some are opting for short sales. Even if the borrowers are started off on the modification trail banks are not likely to return from the foreclosure process. They keep their options open just in case the modification plan fails.
A sure sign of the success of the modification measures is the cancellation of foreclosure auctions. Till now there has been a modest increase in these numbers of cancellations. However it is not sufficient to explain the wide gap between the number of defaults and bank repossessed units.
It may be tentatively surmised that the foreclosures will continue to stay at a high level for the forthcoming years but there will not be a sudden rush from the side lines. Currently California is noting a shortage in the inventory numbers. This is because short sales are still not easily done. Many house owners are underwater with the value of their property being less than the loan amount. They naturally want to wait for the market to rise before putting their estates up for sale. Nobody wants to suffer a loss unless absolutely unavoidable.
O’Toole further argues when the USA government came forward to assist the banks the scenario changed. He said, “There’s so much government middling into this process. When you have this much government intervention going on, things don’t necessarily proceed as they should.”
Data shows that the gap between REO’s and foreclosure sales is about 90,000 in the California and the shadow inventory in actuality is approximately close to 22,500. Are foreclosures waiting in the sidelines to rush in real?
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