The July 2011 national residential shadow inventory of foreclosed homes declined to 1.6 million homes. This is a decrease from April 2011 when there were 1.7 millions units and a decrease from 1.9 million homes in July 2010 and 2 million homes in January 2010. Simply put, banks are selling foreclosed properties faster than they are foreclosing on new properties. It is important to remember that in October 2010 the many banks stopped foreclosing as the robo-signing scandal was revealed. It remains to be seen whether banks will continue to dispose of foreclosed properties at a higher rate than they foreclose on new properties as they continue to refine their foreclosure processes. Banks are also making more efforts to prevent homes from falling into foreclosure.
The shadow inventory is defined as the number of homes that are seriously delinquent in mortgage payments (90+ days) that are not listed in the MLS and that are likely to become foreclosures.
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