Ok....so for the past few months, I have been hearing a lot
of people saying that their REO Inventory has been slashed or REO is really
slow....or...."a decrease in REO inventory" however, I would like to
suggest an alternative opinion.


First, let's talk about one of the earliest steps to
foreclosure, the NOD or Notice of Default. Now, I have looked everywhere and I
can't find a single source authority on just how many have been sent out
monthly since the start of 2011 as a nationwide statistic however, I did find some
interesting articles on many different websites that lead me to believe that
the NODs are on the rise. Granted, I searched like 20-30 different websites so,
I can't realistically quote each one however, the overall trend was most areas
have seen a steady or slight increase in the number of NODs each month. I did
see some articles where some areas have seen a decrease in NODs but, these were
really rare and seemed to be in areas where the average home price was well
over 250k.


My point above is, most of us haven't seen the numbers of
NODs drop significantly enough to see such a dramatic decrease in inventory.
Let's be honest with each other....how can we have a decrease in NODs when we
haven't really seen a correlated decrease in the unemployment rate? Yeah, I
said it.....and yes, it's obvious. If you don't have jobs...or job growth then
how can you see a decrease or even a leveling out of NODs? You can't....well,
you shouldn't anyways.


Now, what I do see happening, more and more is that many
homeowners are staying in their homes much, much longer than ever before. I
remember a time when I would do a relocation assistance negotiations and the
homeowner had only missed like 7 payments. Now, it's more like 24.....as a


The sad truth of the matter is, regardless of how long these
people stay in their homes, regardless of whatever new "refinance"
plan the government can come up with, these people can't maintain a monthly
payment because they are too buys trying to find the money to pay their cell
phone bill, their electric bill, their car payment, car insurance, gas, bread,
milk, new shoes for little Jimmy and Susie, etc...


In short, yes....your inventory maybe shrinking...hell, it
my have even dried up but, it's not because no one in your service area is in
default, it's likely because the servicers and investors in your area are under
some type of regulations or "understanding" that if they don't want
to loose their FDIC insurance or be audited by the FDIC, they better slow their
roll on foreclosure and keep people in their homes....at least until after the
election that is.

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  • I agree with you 100%, the REO inventory is down significantly, but the NOD list is still moving along every month. I don't think we'll see any (significant) inventory until after the election. The sad news is this administration is going to drag out the down market for years. What should have taken 5-7 years (typical down cycle) will now take 7-10 years. Even worse, the economy won't bounce back until the RE market settles. Dig in folks it's going to be a long bumpy ride!

  • Every property I have gotten in the last 2 years have been vacant for at least 6 months and most of them for a year or more. Got a new property in this morning and it's been vacant since 10/14/2010. I don't even remember the last time I did a CFK. BPOs the same way. Vast majority are vacant and have been vacant for months. It's pretty clear to me that nothing is being forclosed on that's occupied.

  • so true jesse. thx for being honest. i have been completeing interior bpo's on properties that have been sitting vacant for over a year. i also keep receiving repeat assignments on occupied properties for the last 2 years. i do not agree with the current administrations policies for our tax dollars going to keeping these properties maintained while they sit empty. is this an attempt to slowdown depreciation and stabilize the market or an attempt to hide this inventory for re election campaign? the NOD list still seems plenty large each week around here. still waiting for the wave to arrive.
  • In one week alone in Washington County Oregon, we saw 1600 NOD's filed! This places the tidal wave hitting us in Jan. I have had several companies set me up in LPSDesktop for reimbursements, and even had an AM ask to link with me on linkedin just yesterday.
  • I agree, inventory is coming. Based on the expired flyers I sent to short sales in my area (Chicagoland). The majority are coming back to me in the mail, marked Vacant/no forwarding address. I also work with many different companies to help homeowners in default, and many won't even fill out the forms to try to modify their loans!

    And, yes, homeowners are staying in their homes much longer. It's crazy here! So I, too, believe the wave is coming.

  • The few asset managers and and vendor managers I have spoken to this month have all said the inventory is coming.  In my home town of Palo Alto where the average price of a home is significantly over a million dollars there were 4 foreclosures sold on MLS in the last year. According to Foreclosure Radar there are 12 trustee sales scheduled for this month. Obviously not all of these will happen, but it seems like foreclosures will be going up not down. Probably not enough to bring values down here, but it seems like the demand for homes in the silicon valley is high enough that if these home go on the market as foreclosures they are unlikely to sit around for long.  Also, California's new anti-deficiency law on seconds seems to be making short sales a little more difficult.
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