Like many of you active REO Brokers, I too have found my REO inventory has shrunk....dramatically. In the past 6 months, I have seen 2 of my 4 AMP's layoff almost all of their Asset Managers and send out notifications that they have had their inventory re-assigned to another AMP. I have spoken with AMP CEO's who tell me that inventory is down across the nation and the market is more competitive than it has ever been. All in all, the golden year of REO is over.
Now, this flies in the face of some vital statistics that should be driving REO and keeping us REO Brokers busy as little bees. Let's look at one particular vital statistic, unemployment. Per the Bureau of Labor Statistics, since February of 2009, the nation's unemployment has remained above 8%, peaking at 10% back in October of 2009. Keep in mind, this number doesn't account for the millions of people who drop out of the unemployed workforce but, would still need a full time job. It's speculated that this number, the "real" unemployment rate is 14 - 18%. With 4 years of high unemployment, and a saturated market, most areas see a DOM (Days on Market) of a 6 months or more. So, if just using unemployment numbers and a minimum 6 months DOM, we should still be seeing the same REO inventory as we did at a minimum back in 2009, considering we are still at a unemployment rate above 8% and a "real" unemployment rate of 14%....right? So, where are all the REOs?
Finally, to further this point, I will make one last observation. In the Monday Jun 11, 2012 issue of National Mortgage News, it was reported in the article written by Paul Muolo that Fannie .....Fannie Mae alone, has an estimated $20 BILLION....yes, you heard me correct, $20 BILLION, in mortgages that are in the arrears. So, where are all the REOs?
It was just 3 years ago or so, I would walk into a struggling homeowners home and he would tell me that he was past due 5 months and the bank is threatening foreclosure. We would talk about short selling and he would likely list. 2 years ago, I would walk into a struggling homeowners home and he would tell me that he was past due 8-10 months and the bank was threatening foreclosure. Most of the time we would talk about short selling and he would list. 1 year ago, I would walk into a struggling homeowners home and he would tell me that he was 15 months past due, doesn't have any job prospects, on unemployment and was reading online that he could save his home with some government program. We would do the paperwork for a loan modification and, he would get on his trial payment for 6 months. After the 2nd month, he would default off because he didn't have any money, the bank would foreclose and he would be there for another 6 months till eviction. Now, I can go into a struggling homeowners home and, he tells me he has been past due now for 36 months, worked on a loan modification, was told he doesn't qualify, and now the bank has set a foreclosure sale date in 3 weeks so, he wants to know if he puts his home up for short sale, how much time would that give him before he has to be out. My point is, banks aren't foreclosing within a reasonably time frame after default. My 2nd point is, it seems that government influence, these "save your home" programs have done nothing but create a atmosphere where banks either can't or won't move forward aggressively with foreclosure.
The larger picture here is, we have a lot of homeowners who need to be foreclosed on....yes, I said it. We have a lot of homeowners who are living in homes they no longer own yet, banks aren't evicting. Instead, we have a lot of homeowners who are being feed lies from our government that they can save their homes. It seems to me that these banks are then forced to cooperate, even at their own peril, because some politician wants to win at the ballot box by telling homeowners....."YES WE CAN".
Once the pipe dream has ended and reality sinks in, America the Beautiful is going to become more of America the Broker and the really sad part is that because we refuse to tackle this tragedy of Government gone wild, individual Americans are going to find themselves with nothing more than burdensome debt and a handful of I.O.U's that read, "should-a, could-a, would-a"
Make no mistake, the REO inventory is there.....in a really big way however, it's hidden...away from the sight of most people because politically, it's just not something you can run on and get re-elected if you expose it to the light of day.
Comments
Is anyone dealing with LPS ? I have been with them for over 25 years, through various companies, but I know and have heard there has been many personal changes and client loss. Anyone got any new news.
I just found this blog, from BiggerPockets.com. It goes right in line with what we are discussing here. http://www.biggerpockets.com/renewsblog/2012/06/27/behind-real-esta...
Jesse, you said it right, my REO inventory has shrunk, doing tons of BPOs, people sitting in the homes for years without paying, no foreclosure an no modification, strategic sellers are jumping in short sale market as well. I truly believe that Default inventory is ballooning up. In general our inventory here in Orange county CA is all time low, even lower than the boom time of 2005-2006 when people paid over the list price. Once again we have false, shortage of homes in the area, buyers are struggling, paying over the list price, my REO are selling with multiple offers. Default inventory have to move one way or the other to normalize the market. I think until Nov. nothing will happen..
Hey Kent,
I get Mortgage New delivered every week. The full name is National Mortgage News and it's the Monday June 11, 2012 Volume 36 No 37 edition, front page, 3rd column. They have a website, it's http://www.nationalmortgagenews.com/ but, I don't know if they publish the paper on line or not. Yeah, I know...a real "paper" news paper.....God, I feel so out dated sometimes....lol
Great Article Jesse. In the Monday Jun 11, 2012 issue of National Mortgage News, it was reported in the article written by Paul Muolo that Fannie .....Fannie Mae alone, has an estimated $20 BILLION....yes, you heard me correct, $20 BILLION, in mortgages that are in the arrears. I can not find this article. Any help would be appreciated. Thanks.