Invisible Inventory or Not

[gdcox]

‘Bank repossessions, which increased 171 percent in June, are rising at a “much faster pace” than default notices and auction notices’

Realty Trac data.

Question from a data amateur………………… Since Bank Reos are rising at 171% and repos at 55% (nationally) presumably this means that inventory is building fast but the aggregate inventory data does not seem to show that . Does the inventory data capture all these properties owned by lenders of various kinds or is there an increase in invisible inventory, perhaps not put on the market yet by banks etc.

[temeculaguy]

I am confused by the sentence in quotes and what the author is tring to point out and compared to when? May?. “auction notices” (notice of trustee sale) are the warning 30 days before it becomes an reo but it’s the same house, those are the three stages, reo’s can’t outnumber nods or nots, every reo was 1st a nod and then a not.

Perhaps they are showing that less nots are cured (refi’d or reworked and escaping the trustee sale) as compared to last year or prior years.

That data won’t cause inventory to increase because the house would have been a normal listing had it not been a reo listing so you see a larger percentge of reo’s and not that many more actual houses for sale, what you get is much fewer traditional listings where the owner is occupying the house and current with their payments. Current prices is also keeping potential normal listings from listing. Those people not behind in payments and not in any form of distress are opting to not compete with reo prices.

[temeculaguy]

I am confused by the sentence in quotes and what the author is tring to point out and compared to when? May?. “auction notices” (notice of trustee sale) are the warning 30 days before it becomes an reo but it’s the same house, those are the three stages, reo’s can’t outnumber nods or nots, every reo was 1st a nod and then a not.

Perhaps they are showing that less nots are cured (refi’d or reworked and escaping the trustee sale) as compared to last year or prior years.

That data won’t cause inventory to increase because the house would have been a normal listing had it not been a reo listing so you see a larger percentge of reo’s and not that many more actual houses for sale, what you get is much fewer traditional listings where the owner is occupying the house and current with their payments. Current prices is also keeping potential normal listings from listing. Those people not behind in payments and not in any form of distress are opting to not compete with reo prices.

[temeculaguy]

I am confused by the sentence in quotes and what the author is tring to point out and compared to when? May?. “auction notices” (notice of trustee sale) are the warning 30 days before it becomes an reo but it’s the same house, those are the three stages, reo’s can’t outnumber nods or nots, every reo was 1st a nod and then a not.

Perhaps they are showing that less nots are cured (refi’d or reworked and escaping the trustee sale) as compared to last year or prior years.

That data won’t cause inventory to increase because the house would have been a normal listing had it not been a reo listing so you see a larger percentge of reo’s and not that many more actual houses for sale, what you get is much fewer traditional listings where the owner is occupying the house and current with their payments. Current prices is also keeping potential normal listings from listing. Those people not behind in payments and not in any form of distress are opting to not compete with reo prices.

[temeculaguy]

I am confused by the sentence in quotes and what the author is tring to point out and compared to when? May?. “auction notices” (notice of trustee sale) are the warning 30 days before it becomes an reo but it’s the same house, those are the three stages, reo’s can’t outnumber nods or nots, every reo was 1st a nod and then a not.

Perhaps they are showing that less nots are cured (refi’d or reworked and escaping the trustee sale) as compared to last year or prior years.

That data won’t cause inventory to increase because the house would have been a normal listing had it not been a reo listing so you see a larger percentge of reo’s and not that many more actual houses for sale, what you get is much fewer traditional listings where the owner is occupying the house and current with their payments. Current prices is also keeping potential normal listings from listing. Those people not behind in payments and not in any form of distress are opting to not compete with reo prices.

[temeculaguy]

I am confused by the sentence in quotes and what the author is tring to point out and compared to when? May?. “auction notices” (notice of trustee sale) are the warning 30 days before it becomes an reo but it’s the same house, those are the three stages, reo’s can’t outnumber nods or nots, every reo was 1st a nod and then a not.

Perhaps they are showing that less nots are cured (refi’d or reworked and escaping the trustee sale) as compared to last year or prior years.

That data won’t cause inventory to increase because the house would have been a normal listing had it not been a reo listing so you see a larger percentge of reo’s and not that many more actual houses for sale, what you get is much fewer traditional listings where the owner is occupying the house and current with their payments. Current prices is also keeping potential normal listings from listing. Those people not behind in payments and not in any form of distress are opting to not compete with reo prices.

[cr]

[quote=temeculaguy]Those people not behind in payments and not in any form of distress are opting to not compete with reo prices. [/quote]

…for now. Some of those with a portion of the $300 billion is CA option ARMs resetting this year will soon be forced to list. They may think housing will recover in 3 months.

The realtytrac quote at a glance sounds like NODs are on the decline. Maybe, maybe not. Seems unlikely, but could be temporary, or could be more paper work than can be handled. The “phantom” inventory issue is a heated topic here.

But either way, foreclosure numbers across the board are still rising. At some point that inventory has to come to market.

[cr]

[quote=temeculaguy]Those people not behind in payments and not in any form of distress are opting to not compete with reo prices. [/quote]

…for now. Some of those with a portion of the $300 billion is CA option ARMs resetting this year will soon be forced to list. They may think housing will recover in 3 months.

The realtytrac quote at a glance sounds like NODs are on the decline. Maybe, maybe not. Seems unlikely, but could be temporary, or could be more paper work than can be handled. The “phantom” inventory issue is a heated topic here.

But either way, foreclosure numbers across the board are still rising. At some point that inventory has to come to market.

[cr]

[quote=temeculaguy]Those people not behind in payments and not in any form of distress are opting to not compete with reo prices. [/quote]

…for now. Some of those with a portion of the $300 billion is CA option ARMs resetting this year will soon be forced to list. They may think housing will recover in 3 months.

The realtytrac quote at a glance sounds like NODs are on the decline. Maybe, maybe not. Seems unlikely, but could be temporary, or could be more paper work than can be handled. The “phantom” inventory issue is a heated topic here.

But either way, foreclosure numbers across the board are still rising. At some point that inventory has to come to market.

[cr]

[quote=temeculaguy]Those people not behind in payments and not in any form of distress are opting to not compete with reo prices. [/quote]

…for now. Some of those with a portion of the $300 billion is CA option ARMs resetting this year will soon be forced to list. They may think housing will recover in 3 months.

The realtytrac quote at a glance sounds like NODs are on the decline. Maybe, maybe not. Seems unlikely, but could be temporary, or could be more paper work than can be handled. The “phantom” inventory issue is a heated topic here.

But either way, foreclosure numbers across the board are still rising. At some point that inventory has to come to market.

[cr]

[quote=temeculaguy]Those people not behind in payments and not in any form of distress are opting to not compete with reo prices. [/quote]

…for now. Some of those with a portion of the $300 billion is CA option ARMs resetting this year will soon be forced to list. They may think housing will recover in 3 months.

The realtytrac quote at a glance sounds like NODs are on the decline. Maybe, maybe not. Seems unlikely, but could be temporary, or could be more paper work than can be handled. The “phantom” inventory issue is a heated topic here.

But either way, foreclosure numbers across the board are still rising. At some point that inventory has to come to market.

[peterb]

The whole process starts with NOD’s. From this point on, the owner of the mortgage has a fair amount of freedom as to how fast they process it. I think the fastest a property can go NOT from NOD is about 6 months. The mortgage could get cured in this time period or a short sale could happen as well. If the mortgage is 5 years old or less, then the odds are good that the debt is higher than the market value of the property. So a short sale is about all that could save the property from becoming an REO. But still, how quickly a lender wants to get the property back is really up to them. And then once it is REO, they may not list on the MLS…they may put it in an auction pool.
So, you can see how listings can be very misleading way to discuss “inventory” at this time.
Mr. Mortgage estimates that 70% to 80% of NOD’s will end up being REO. This may be a better way to get a handle on how much inventory is really out there or will be in the next 12 months.
Another factor that may be influencing this is that the lender does not have to declare a loss on their books until the property is actually sold at a loss. So they may also want to “parse” out the properties over time rather than dump them all at once and clobbered with losses in one quarter. The losses may be worse than having a bunch of non-performing loans on their books. At least for a few quarters anyway.

Bruce Norris, the famous buyer of distressed property in the Riverside County area, is focusing very strongly on the auction environment these days as he feels the situation for REO’s is so huge that lenders are forced to use auctions rather than just list them on the MLS.

[peterb]

The whole process starts with NOD’s. From this point on, the owner of the mortgage has a fair amount of freedom as to how fast they process it. I think the fastest a property can go NOT from NOD is about 6 months. The mortgage could get cured in this time period or a short sale could happen as well. If the mortgage is 5 years old or less, then the odds are good that the debt is higher than the market value of the property. So a short sale is about all that could save the property from becoming an REO. But still, how quickly a lender wants to get the property back is really up to them. And then once it is REO, they may not list on the MLS…they may put it in an auction pool.
So, you can see how listings can be very misleading way to discuss “inventory” at this time.
Mr. Mortgage estimates that 70% to 80% of NOD’s will end up being REO. This may be a better way to get a handle on how much inventory is really out there or will be in the next 12 months.
Another factor that may be influencing this is that the lender does not have to declare a loss on their books until the property is actually sold at a loss. So they may also want to “parse” out the properties over time rather than dump them all at once and clobbered with losses in one quarter. The losses may be worse than having a bunch of non-performing loans on their books. At least for a few quarters anyway.

Bruce Norris, the famous buyer of distressed property in the Riverside County area, is focusing very strongly on the auction environment these days as he feels the situation for REO’s is so huge that lenders are forced to use auctions rather than just list them on the MLS.

[peterb]

The whole process starts with NOD’s. From this point on, the owner of the mortgage has a fair amount of freedom as to how fast they process it. I think the fastest a property can go NOT from NOD is about 6 months. The mortgage could get cured in this time period or a short sale could happen as well. If the mortgage is 5 years old or less, then the odds are good that the debt is higher than the market value of the property. So a short sale is about all that could save the property from becoming an REO. But still, how quickly a lender wants to get the property back is really up to them. And then once it is REO, they may not list on the MLS…they may put it in an auction pool.
So, you can see how listings can be very misleading way to discuss “inventory” at this time.
Mr. Mortgage estimates that 70% to 80% of NOD’s will end up being REO. This may be a better way to get a handle on how much inventory is really out there or will be in the next 12 months.
Another factor that may be influencing this is that the lender does not have to declare a loss on their books until the property is actually sold at a loss. So they may also want to “parse” out the properties over time rather than dump them all at once and clobbered with losses in one quarter. The losses may be worse than having a bunch of non-performing loans on their books. At least for a few quarters anyway.

Bruce Norris, the famous buyer of distressed property in the Riverside County area, is focusing very strongly on the auction environment these days as he feels the situation for REO’s is so huge that lenders are forced to use auctions rather than just list them on the MLS.

[peterb]

The whole process starts with NOD’s. From this point on, the owner of the mortgage has a fair amount of freedom as to how fast they process it. I think the fastest a property can go NOT from NOD is about 6 months. The mortgage could get cured in this time period or a short sale could happen as well. If the mortgage is 5 years old or less, then the odds are good that the debt is higher than the market value of the property. So a short sale is about all that could save the property from becoming an REO. But still, how quickly a lender wants to get the property back is really up to them. And then once it is REO, they may not list on the MLS…they may put it in an auction pool.
So, you can see how listings can be very misleading way to discuss “inventory” at this time.
Mr. Mortgage estimates that 70% to 80% of NOD’s will end up being REO. This may be a better way to get a handle on how much inventory is really out there or will be in the next 12 months.
Another factor that may be influencing this is that the lender does not have to declare a loss on their books until the property is actually sold at a loss. So they may also want to “parse” out the properties over time rather than dump them all at once and clobbered with losses in one quarter. The losses may be worse than having a bunch of non-performing loans on their books. At least for a few quarters anyway.

Bruce Norris, the famous buyer of distressed property in the Riverside County area, is focusing very strongly on the auction environment these days as he feels the situation for REO’s is so huge that lenders are forced to use auctions rather than just list them on the MLS.

[Author]

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