Shadow Inventory? Maybe Shady Inventory would be a better description.
We can only speculate as to why the banks are not starting the foreclosure process on delinquent homeowners, or if they have started the “process”, why they aren’t finshing it. And the biggest question of all is, if they’ve completed the foreclosure process, why aren’t they putting their properties (inventory) on the market and disposing of them? That is called “shadow inventory”. It’s the vacant properties that dots all of our neighborhoods with the dead lawns and the green swimming pools and that have been vandalized. It (the shadow inventory) lurks behind the scenes. A little “shadowy”. There could be many reasons for this accumulation of inventory. But as a “free market” advocate, I’m not really buying any of them. Just like we should have let the banks fail and clean up their own mess, but NO, we bailed them out, and now that they are back on their feet, so-to-speak, they are less willing to lend money on real estate because they are making better returns elsewhere. But I digress. So, why aren’t they putting their bank-owned properties (REO’s) on the market? Is it because they don’t want to account for their losses yet? Is it because the American people can’t handle any more negative real estate press? Is it because they (the banks) are trying to artificially raise real estate prices or at least firm them up by restricting supply? Is it because they’ve been directed by the Feds not to divert attention away from the Helath Care debate? It could be any one of these things, or all of these things, or none of these things. One thing I do know is that the banks got us into this mess with their sloppy lending practices (and the Fed’s hands aren’t clean either) and they are keeping us in this mess by not dealing with it in a timely manner so we can get it behind us. We have plenty of loans coming up in the next several months which will be adjusting to a point that the homeowners won’t be able to afford them. Let’s deal with it and move on. This isn’t good for anyone…Except maybe the banks. Let me know what you think.
Wallace…
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