Comments on: The shadow inventory equals shadow gibberish?

By: Mary Yu

Mary Yu — Sat, 03 Jul 2010 22:32:27 +0000

RT @agentgenius: #agnow I believe one must go beyond the wishful thinking of real estate salespeople to understand the issue of the ... http://bit.ly/5kr7ju

By: AgentGenius

AgentGenius — Sat, 03 Jul 2010 22:29:04 +0000

#agnow I believe one must go beyond the wishful thinking of real estate salespeople to understand the issue of the ... http://bit.ly/5kr7ju

By: MegaCynic

MegaCynic — Sat, 03 Jul 2010 12:05:27 +0000

I believe one must go beyond the wishful thinking of real estate salespeople to understand the issue of the shadow inventory. One must study the bigger picture of the economic motivation of banks and other large mortgage investors (like pension plans).

For a “top down” view of what might be motivating an increase in the shadow inventory in some markets you might want to read an article from the Wall Street Journal titled “Congress Helped Banks Defang Key Rule” 6/03/09, by Susan Pulliam & Tom McGinty. Then try to connect the dots . . . .

If a bank or mortgage investor can avoid “marking” the investment to its market value the investor’s investment appears not to have suffered any loss (from the investment’s origination value). This is very important for banks because even small loses in investment values require the setting aside of loan loss reserves and an increase in bank reserves (more equity?).

Selling a property or completing a foreclosure are events that force revaluation of the asset. These events also force the recording of the new owner of record which clearly defines liability for property taxes, municipal assessments, homeowner association fees, etc.

It seems that banks may be delaying the completion of foreclosure to avoid marking the investment to the market. And, it seems in some instances mortgage investors would prefer to have a borrower in default living on the property because the borrower in default continues to be legally obligated for property taxes and other assessments. Such a borrower in default also provides some level of security and maintenance for the property. (Do a key-word search on: squatter borrower in default.)

By: Short Sale

Short Sale — Tue, 22 Jun 2010 09:23:06 +0000

The shadow inventory equals shadow gibberish? http://ow.ly/21wJZ #RealEstate #RE #ShortSale #Foreclosure #REO

By: REO Auctions

REO Auctions — Tue, 22 Jun 2010 09:23:06 +0000

The shadow inventory equals shadow gibberish? http://ow.ly/21wJY #RealEstate #RE #ShortSale #Foreclosure #REO

By: Jonathan Usher

Jonathan Usher — Tue, 22 Jun 2010 09:23:05 +0000

The shadow inventory equals shadow gibberish? http://ow.ly/21wJq #RealEstate #RE #ShortSale #Foreclosure #REO

By: AgentGenius

AgentGenius — Mon, 10 May 2010 21:19:47 +0000

#agnow Our area never saw any inventory of any kind jump up the way resale equity owners did. REO/Short Sales crep... http://bit.ly/5kr7ju

By: cheenastar

cheenastar — Mon, 10 May 2010 20:15:13 +0000

@agentgenius The shadow inventory equals shadow gibberish? http://bit.ly/6XBPqr

By: Joe Loomer

Joe Loomer — Mon, 10 May 2010 17:19:34 +0000

Our area never saw any inventory of any kind jump up the way resale equity owners did. REO/Short Sales crept up to about 8% of our inventory, but it’s stable now. Other than a major industry LEAVING our area, we’ll never see the kind of REO inventory your market does.

Navy Chief, Navy Pride

By: Carmen Brodeur

Carmen Brodeur — Sun, 09 May 2010 23:17:37 +0000

The people who are constantly talking about the shadow inventory are forgetting the whole point of shadow inventory….the banks want to hold back some properties so that they don’t flood the market and further depress prices. Why would the banks/feds allow the prices to be further crushed by dumping tons of properties on the market at the same time? Whatever inventory that is truly in the “shadow” will only be released slowly so will have very little effect on the market. The feds and banks learned their lesson during the S&L crisis when too much inventory was dumped at the same time.