Many agents in my office are preparing by getting more educated on the short sale process in order to help many of these owners avoid foreclosure altogether. I personally think the foreclosure inventory will hit but may be offset by lenders becoming more amenable to the short sale transaction.
My office has been told to expect a flood in January. All of the failed mod's (and recently completed mod's that are defaulting again) are going to start flooding in, according to my contact at Fannie Mae. I hope so, because my REO volume is 10% of what it was 18 months ago.
Short sales are not going to help stop the tide, because most people in my area don't qualify, since our values have not dropped that much. NOD's in my area are up 78% from last year, and most are multiple filings (average is 4 months).
I doubt there is a "ghost" inventory, but the delinquency level for prime loans is at historic highs, and looks more like the sub-prime default rate from before the crash. I don't think the banks can keep delaying the foreclosures too much longer, because the investors are going to want to start getting some money in from the liquidation of the defaulted loans.
I don't think there is any ghost inventory in my area, and the incoming inventory stopped this December but I am expecting to see it pick up in January.
It's coming but the problem seems to be the Mark to Market with most banks and I dont think that is just going to go away in January. However Im getting my systems in place and fixing the things that didnt work last year.
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