I heard that some lenders put up their REO properties up for lease, through some type of asset management contract arrangements until they sell them. With mortgage income potentially replaced by rents, they should not be financially hurting. If we wait for those "shadow inventory" to come to market in large quantity all at once, we may be disappointed. One thing we can speculate with almost certainty: once rented, the properties are not in distress. So I agree with Steve's observation so far, there is trickle, no flood.
In my area of Southwest Florida there are properties being released slowly. As for "Shadow inventory"....there are many in this area. I am closing one now that was initialy secured, rekeyed and has had lawn maintanence since 11/14 2007.....yes 2007 I got the listing in March of 2010. There are many that I do BPO's on that have been vacant for over a year and whether you blame it on a slow foreclosure process or moritoriums these homes could have been disposed of sooner but have not been. The banks are trying to hedge pricing upward and decrease their losses, so far it is working so yes....there will be a slow release.
The reality is a flood of properties means that the government is going to have to allow banks to forclose and evict people out of their homes and, that isn't going to happen, at least not as a gian tsunami of properties to hit the market. The political capital isn't in Washington to spend. Elections are coming, the country is polarizing, progressive marxist agendas are taking root, and the progressives in power are following the Franklin Roosevelt 2nd bill of rights agenda.
by the way, if you don't know what the 2nd bill of rights is, google it and look at right number 5 and if that isn't enough to shed the light on the "shadow inventory"..............you may be lost in the dark forever.
If there is no flood of foreclosures (resulting in "shadows"), that could mean: short sales and loan-modifications during pre-foreclosure. With property owner's credit risk down by the sewer drain, either they go with low requirement for loan-mod (which does not yet happen), or there won't be many good loan-mods. That means, what's left would be short-sales? Look at it as if there may be a flood of pre-foreclosure transactions of properties (or their mortgages) changing hands. Isn't it happening in residential, and yes: commercial too? Anyone concur? What puzzles us is why loan services/ or lenders are generally slow in their short-sale approval process - this could be their manifestation of "shadow" or even "dark" mystery.