The PipeLine Of “Shadow” Inventory Is Growing – Pushing Off Your “Return To Equity” Date

Posted on January 7th, 2011 in All Articles, Short Selling/Buying.

CHICAGO, IL. Short Sale Super Man Checking in. Phil Buoscio, Better Living Realty.

The delays in the foreclosure processes around the nation made that pipeline longer. As Attorney Generals’ jumped on the issue of lender fraud state foreclosures were delayed as moratoriums were instilled then lifted caused a further backlog of inventory.So here we are in January 2011–a new year. But it seems the pipeline is still getting longer. How much longer?

Loan Servicers don’t have a handle on the big picture…. . Evidence of this is in the Lender Processing Services (LPS) recent market data analysis. Things are still getting worse and the pipeline is still getting LONGER.

-In November, 261,153 loans were referred to foreclosure, which represents a 0.7 percent decline from the previous month. –

-fewer loans moved to the foreclosure start line, LPS says the nation’s foreclosure inventory rose  for the fifth straight month as sales of foreclosure properties dropped again.

–  foreclosure inventory rate rose to 4.08 percent as of the end of November, with 2,157,000 loans caught in the pipeline somewhere in the foreclosure process.

– This 2,157,000 number is up from 3.92 percent, or 2,090,000 loans, the month before.

-Jumbo loans are even worse:  foreclosure inventory of jumbo prime loans is nearly seven times higher than it was in January 2008; the inventory of agency (Fannie Mae and Freddie Mac) prime loans is nearly six times higher

-the foreclosure inventory of option adjustable-rate mortgages (ARMs) is approaching five times the inventory in January 2008.

-There are about 40 Billion in “Arm Resets” coming due in 2011 – which will cause more “upside” down homeowners with negative equity and hardships into foreclosure.

In summary… the soonest the shadow inventory will “burn off” is 36 months. Pushing the return to appreciation in most areas of Chicagoland off until at least 2015 (Spring) at the absolute earliest.

Thanks for reading this, Phil Buoscio.

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Phil is a Real Estate Agent at Better Living Realty – Buoscio Brokerage, Inc..
Phone: (312) 953-6725.
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