I came across this article with a referred post, and although I typically don't rely on alternet or any other politically charged site, left, right or center, when posting on a particular subject, this is spot on and data rich, so it's relevant and useful. Banks aren't taking possession of houses after foreclosure, creating a "shadow inventory" that may derail the recovery. http://www.alternet.org/workplace/1...ter'_do_like_the_banks_do_and_just_walk_away/
Interesting article. I can tell you first hand that âshadow inventoryâ is real. Iâm a realtor in Northern California and handle the short sales for my firm, which is also heavily involved in mortgage modification. Those calling a bottom in the housing market really have no idea what theyâre talking about. Bank of America has around 8 Million home loans under water and their short sale department is a mess. Without going on and on, let me just say that Iâve sold all of my financial stocks including BAC in August. Now ad to this mix the most recent 9.7% unemployment, which is actually much higher as it under reports the self-employed and those who are working under furlough conditions and the real numbers are in the teens. Iâm typically an optimistic fellow, but this mess in housing has a ways to go. FWIW
what does this mean? are people able to just continue living the their houses because the bank isn't taking possession of them? the people are getting the foreclosure notice but they can just ignore it because there's no enforcement?
Yep I've heard stories of people months behind and they havent even been served with foreclosure papers yet even after a couple warnings that they were coming.
Why should the banks worry? They've got the American taxpayer backstopping them. Too big to fail, right?
This is crazy and I don't believe it. If this information becomes public, everyone will do it including me.
Bidask, I have listings where the owner hasnât made a payment in over a year and there is still no notice of default let alone a notice of sale. How can this be? Some of the banks are just so overwhelmed that incredibly, they havenât been able to âget around to itâ yet. If BAC were to foreclose on all of the properties that are behind in their payments it would swamp the market with new listings driving down prices even further. Hence the âshadow inventoryâ. The banks have been bailed out to ward off a collapse now theyâre praying for a recovery in the economy. As bad as that sounds, listen to this; banks have tightened lending standards and it is harder to qualify buyers to buy these homes. Normally thatâs okay but it still leaves a supply demand imbalance in the housing market that is going to be with us for a while.
CA is a mess, Las Vegas is a mess. Phoenix is a mess. Florida is a mess. Smokestack America is a mess but that has nothing to do w/the real estate bubble - that area has been in decline of 50 years. The rest of the country is pretty much business as usual.
Imagine if this became "acceptable" in the minds of all those currently on the edge. Whether mortgage debt, credit cards, student loans etc. How much easier it would be to let things go if your friend, relative, neighbor went the same route. When you owe the bank 100k, the bank owns you. When you owe the bank (in aggregate) billions, you own them.
illiquid wrote "Imagine if this became "acceptable" in the minds of all those currently on the edge." I think it already has.