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Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate.
There is probably even more excess housing inventory gumming up the market than current statistics indicate, thanks to a wave of foreclosures that has yet to hit the market.
The problem: Many foreclosed homes and other distressed properties that are now owned by banks have yet to be listed for sale. The volume of this so-called 'ghost inventory' could be substantial enough to depress already steeply falling prices when it does go on the market.
That was the flaw in the Democratic plan for a 3 month delay on foreclosures. It just backlogged and stacked the inventory up to be liquidated..
The backup was already there. A lot of the "backup" is in the courts. The bank has to go to court FIRST before they can foreclose. In Miami the court calendar is backed up SIX MONTHS with forclosure hearings.
Additionally, some home owners go into bankruptcy in order to save their homes, and that puts a stay on any foreclosure proceedings in state court. The trustees and debtor's attorney try to work out a Chapter 13 plan of payment over five years so that the debtor can get a fresh start. Homesteads are exempt. However, if the debtor cannot come up with an acceptable bankruptcy payment plan, then the bankruptcy gets dismissed, the bank gets stay relief from the bankruptcy court, and then the forclosure goes back to state court for a hearing on the foreclosure.
The chief problem is probably system overload: Lenders are just not prepared to handle the sheer numbers of foreclosures that they have on their books. Banks took back about 860,000 in 2008 - more than twice the number in 2007 - according to RealtyTrac. Before the housing crisis hit, it took only about a month to get a bank-owned foreclosure on the market.
Lenders still insist they try to act as swiftly as possible. According to Tom Kelly, a spokesman for Chase (JPM, Fortune 500) Mortgage, their goal is to cut their losses on these homes, which are expensive to maintain, as fast as possible.
But banks might hold back listings in areas where they already have lots of homes for sale in order to avoid flooding the market, according to Michael Youngblood, a financial analyst and founder of Five Bridges Capital, an asset management company.
"If lenders have a significant number of properties in a limited area, they may want to stagger putting them back on the market," he said.
Eve Alexander, a real estate broker with Buyers Broker of Florida in Orlando, attributes the delays to the general malaise that's overtaken the lending industry as it's imploded.
"I think banks are dragging their rears about doing just about everything," she said. "They have so much going on, and there's so much red tape and the people don't care, nothing gets done."
There are also batches of bank-owned homes that don't appear on the multiple listing services because lenders are trying to sell them via bulk and auction sales to investors as well as individuals, according to John Mechem, public affairs director for the Mortgage Bankers Association.
He adds that it's also taking much longer to get many foreclosed homes in decent enough shape to put on the market. (see This home for sale stinks.)
Bank-owned properties are in worse condition than ever because the foreclosure process is taking longer than ever. As much as a year can pass between the time a borrower first misses a payment and the final auction sale, according to Youngblood. During that time, houses often deteriorate because owners have neither the money nor the incentive to maintain them. Some disgruntled homeowners may even deliberately damage homes before they leave.
"According to our servicing folks, it's taking more time for lenders to get properties in saleable condition," said Mechem.
The phenomenon of a growing ghost inventory doesn't promise to get better anytime soon, as long as the rate of foreclosures continues to ravage the market. There were more than 3.1 million foreclosure filings in 2008, according to RealtyTrac.
Said Sharga: "I don't see how we can avoid another 3 million in 2009."
It's probably the moon not properly aligned with Mars too. Just idle speculation by folks who probably thought there was no housing depression back in '05.
I read the article. However, the banks also have to get (from the courts) a date for a foreclosure sale. There have to be legal notices, etc. For sure the banks are sitting on a lot of foreclosures, however, there are all these legal proceedings which have to be undertaken to get possession of the homes and for a foreclosure sale to even be scheduled, plus, of course, many of those homes are in bad condition, yet some of the time it is taking to get those properties "moving" is the time spent in court, which allows even more time for the property to deteriorate.
"I think banks are dragging their rears about doing just about everything," she said. "They have so much going on, and there's so much red tape and the people don't care, nothing gets done." (court time / red tape)
It's probably the moon not properly aligned with Mars too. Just idle speculation by folks who probably thought there was no housing depression back in '05.
The article quoted people who work with foreclosures in the real estate and lending businesses.
The article quoted people who work with foreclosures in the real estate and lending businesses.
...and the Treasury chairs work with money, yet either have no idea on how to predict upcoming problems or can't seem to pay their taxes correctly. Just because you wear a badge clamining you're an expert doesn't make it so.
I wish they would just let the idiots be foreclosed on and let them lose their homes and businesses. I am sick of anyone at all being bailed out of their bad choices.
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