CNBC Sheds Some Light on the 'Shadow Inventory'

I just came across a post from CNBC’s Diana Olick that sheds some light on whether banks are holding onto an inventory of homes that they’ve already foreclosed on instead of putting them on the market.

Here’s what Bank of America told her:

• Foreclosure sales have been abnormally low since we learned of the pending implementation of the administration’s Making Home Affordable program. From that point, we delayed the initiation of foreclosure proceedings and sales for customers that may eligible for a loan modification under MHA. As a result of this policy, our foreclosure sales in recent months have been as little as half the normal pace we experienced before.
• Until a foreclosure is completed, Bank of America continues to exhaust every possible option to qualify customers for modification or other solutions.
• Now that Making Home Affordable programs are operational, we do project an increase in foreclosures as we exhaust every available option to qualify customers for modifications and other solutions.
• While we have very strong loan modification programs now available, unfortunately, these foreclosure projections reflect the increasing number of customers who will not qualify for loan modification because they have suffered major life events servicers can’t solve…primarily unemployment and underemployment.
• We do not hold foreclosed properties off the market. The vast majority of mortgages serviced by Bank of America are owned by third-party investors. We have an obligation to them to prepare foreclosed properties for market and sell them as efficiently as possible.

Glen’s Latest East Bay Housing Statistics…”The Numbers”

That’s 6 straight months of inventory dropping and pending sale increases. This is the lowest inventory for the 38 Cities I track in the San Francisco East Bay since early 2005. We’re seeing buyers coming back into the market along with investors. For many of these cities, we’re experiencing a seller’s market again, including multiple offers and offers over asking. However, we’re still hearing that foreclosures are heading back into the market in the next 60 days. So this may be a short lived window.

Glen’s Numbers 8.1.090001