Shadow inventory finally being released ?

[SK in CV]

[quote=SD Realtor]I think it is an illustration of success from the perspective of the banks and govt. They implemented a plan using taxpayer money that consisted of a slower methodical manner in which to liquidate highly depreciated assets without totally cratering the bubbled market they created. The plan is by no means complete however it seems to be chugging along just fine. What you are seeing is simply the next phase of it. It is not that hard at all to get delinquent homeowners out of homes. If you look at the chronology, if someone has been in a home a year or two without paying, taking an extra couple of months to get them out is a piece of cake.

Sorry folks, no tsunami.[/quote]

Great comment. Though I disagree with you that it was all part of a plan. I think it was, at least in part, the motivation of Treasury, probably the Fed, to a lesser extent the FDIC, and maybe the GSE’s. But not on the part of the loan servicers, which I believe control close to 80% of the market.

Their motivation was/is the complete opposite. Foreclose, as quickly as possible, whether legal, appropriate, or financially beneficial is there motivation. But as they have proven time and time again, in every RE bubble, they are simply incompetent to do it right. Both at the beginning of the process, and once the REO is in their portfolio.

Ultimately, I think it has been nothing more than a major clusterfuck, but all the stars were properly aligned and it worked. Government action (HAMP and other non-mandatory mod programs, tax credits, most all of which were, IMNHO, both ill conceived and/or poorly implememnted.) helped the process. With unemployment ticking down, I think you are exactly right. The first stage has been a humungous success in mantaining some stability in the markets. With probably close to another eighteen months to two years of high delinquencies and foreclosures, there will still be high downward pressure on prices. Countered by slightly increased demand as a result of more consumers with paychecks, lower non-mortgage debt, improving credit.

It’s still going to be a delicate tightrope act. But if we have less than a 10% swing in prices (up or down) over the next two years, it will have to be considered an unmitigated success. Disorganized, improbable, accidental. But it might work.

Biggest threat to it failing miserably? Substantially increased housing starts in the next six months. Last thing the residential RE market needs is more inventory before the overhang is absorbed. Contra-intuitive to the economy as a whole. But still.

[SD Realtor]

Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

Incompetence yes! I will agree with you on that end but you have to make sure you have your targets correct. I think the incompetence level in the liquidation groups that handle the short sales is nothing short of incredible. However when it comes to foreclosing, the beneficiary does not foreclose nor does the servicing entity, it is the trustee that is responsible for that. Of course they can be cancelled or even postponed by the bene. Also if you look back the political outcry from both the state and federal levels was considerable. Recall the various moratoriums put in place and as you brought up the loan mods and all that other fun, (which is still going on).

I would agree with you that the show is not over by a longshot. We have a hell of alot of inventory to chew through and plenty of deadbeats still in homes. It will literally take years to push this lump through the belly of the snake. I am not as concerned about housing starts as I am about interest rates. I think builders are pretty damn smart and will be able to price to sell as they are good at looking ahead. Inventory wise it will have an effect pricing the REO properties but they will get slurped up. Once they hit investment level pricing you will see them get bought.

Stability in rates is questionable at best and to me there is a fantastic drag race going on right now. That is, can the inventory get sold off before the dollar plummets dramatically and rates respond bigtime. I do agree, it will be a tightrope act. If they can keep a lid on rates for another 2 years I think they will be in pretty good shape. I am sure we will be discussing this plenty!

[SD Realtor]

Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

Incompetence yes! I will agree with you on that end but you have to make sure you have your targets correct. I think the incompetence level in the liquidation groups that handle the short sales is nothing short of incredible. However when it comes to foreclosing, the beneficiary does not foreclose nor does the servicing entity, it is the trustee that is responsible for that. Of course they can be cancelled or even postponed by the bene. Also if you look back the political outcry from both the state and federal levels was considerable. Recall the various moratoriums put in place and as you brought up the loan mods and all that other fun, (which is still going on).

I would agree with you that the show is not over by a longshot. We have a hell of alot of inventory to chew through and plenty of deadbeats still in homes. It will literally take years to push this lump through the belly of the snake. I am not as concerned about housing starts as I am about interest rates. I think builders are pretty damn smart and will be able to price to sell as they are good at looking ahead. Inventory wise it will have an effect pricing the REO properties but they will get slurped up. Once they hit investment level pricing you will see them get bought.

Stability in rates is questionable at best and to me there is a fantastic drag race going on right now. That is, can the inventory get sold off before the dollar plummets dramatically and rates respond bigtime. I do agree, it will be a tightrope act. If they can keep a lid on rates for another 2 years I think they will be in pretty good shape. I am sure we will be discussing this plenty!

[SD Realtor]

Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

Incompetence yes! I will agree with you on that end but you have to make sure you have your targets correct. I think the incompetence level in the liquidation groups that handle the short sales is nothing short of incredible. However when it comes to foreclosing, the beneficiary does not foreclose nor does the servicing entity, it is the trustee that is responsible for that. Of course they can be cancelled or even postponed by the bene. Also if you look back the political outcry from both the state and federal levels was considerable. Recall the various moratoriums put in place and as you brought up the loan mods and all that other fun, (which is still going on).

I would agree with you that the show is not over by a longshot. We have a hell of alot of inventory to chew through and plenty of deadbeats still in homes. It will literally take years to push this lump through the belly of the snake. I am not as concerned about housing starts as I am about interest rates. I think builders are pretty damn smart and will be able to price to sell as they are good at looking ahead. Inventory wise it will have an effect pricing the REO properties but they will get slurped up. Once they hit investment level pricing you will see them get bought.

Stability in rates is questionable at best and to me there is a fantastic drag race going on right now. That is, can the inventory get sold off before the dollar plummets dramatically and rates respond bigtime. I do agree, it will be a tightrope act. If they can keep a lid on rates for another 2 years I think they will be in pretty good shape. I am sure we will be discussing this plenty!

[SD Realtor]

Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

Incompetence yes! I will agree with you on that end but you have to make sure you have your targets correct. I think the incompetence level in the liquidation groups that handle the short sales is nothing short of incredible. However when it comes to foreclosing, the beneficiary does not foreclose nor does the servicing entity, it is the trustee that is responsible for that. Of course they can be cancelled or even postponed by the bene. Also if you look back the political outcry from both the state and federal levels was considerable. Recall the various moratoriums put in place and as you brought up the loan mods and all that other fun, (which is still going on).

I would agree with you that the show is not over by a longshot. We have a hell of alot of inventory to chew through and plenty of deadbeats still in homes. It will literally take years to push this lump through the belly of the snake. I am not as concerned about housing starts as I am about interest rates. I think builders are pretty damn smart and will be able to price to sell as they are good at looking ahead. Inventory wise it will have an effect pricing the REO properties but they will get slurped up. Once they hit investment level pricing you will see them get bought.

Stability in rates is questionable at best and to me there is a fantastic drag race going on right now. That is, can the inventory get sold off before the dollar plummets dramatically and rates respond bigtime. I do agree, it will be a tightrope act. If they can keep a lid on rates for another 2 years I think they will be in pretty good shape. I am sure we will be discussing this plenty!

[SD Realtor]

Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

Incompetence yes! I will agree with you on that end but you have to make sure you have your targets correct. I think the incompetence level in the liquidation groups that handle the short sales is nothing short of incredible. However when it comes to foreclosing, the beneficiary does not foreclose nor does the servicing entity, it is the trustee that is responsible for that. Of course they can be cancelled or even postponed by the bene. Also if you look back the political outcry from both the state and federal levels was considerable. Recall the various moratoriums put in place and as you brought up the loan mods and all that other fun, (which is still going on).

I would agree with you that the show is not over by a longshot. We have a hell of alot of inventory to chew through and plenty of deadbeats still in homes. It will literally take years to push this lump through the belly of the snake. I am not as concerned about housing starts as I am about interest rates. I think builders are pretty damn smart and will be able to price to sell as they are good at looking ahead. Inventory wise it will have an effect pricing the REO properties but they will get slurped up. Once they hit investment level pricing you will see them get bought.

Stability in rates is questionable at best and to me there is a fantastic drag race going on right now. That is, can the inventory get sold off before the dollar plummets dramatically and rates respond bigtime. I do agree, it will be a tightrope act. If they can keep a lid on rates for another 2 years I think they will be in pretty good shape. I am sure we will be discussing this plenty!

[SK in CV]

[quote=SD Realtor]Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

[/quote]

I was only referring here to the loan servicers. That’s where they make their money, collect all their fees, with a completed foreclosure. So their business interest is often at odds with their investors. They often have no skin in the game so maximizing return is sometimes incidental. But they are ill equipped to deal with distressed assets, whether it’s a delinquent loan or REO.

I think the whole “manipulate the books” thing is overblown. To the extent the loans are owned by private label MBS, they have no incentive, none at all. Banks that are subject to FDIC, Treasury, OTS and SEC regulation and supervision? They have incentive, but given the scrutiny they’re under, and the market for the last few years, it would seem unlikely there’s widespread continued manipulation. They were mostly pretty conservative in setting aside loan loss reserves a couple years ago in order to get bad business behind them. Are the GSE’s hiding losses? Maybe. Eh…probably. How much is anyone’s guess, but they make up maybe a 1/3 of the outstanding mortgage market.

As to who forecloses…well it is the servicer. They get the ball rolling, nobody else. The servicers, on behalf of the beneficiary control that process.

[SK in CV]

[quote=SD Realtor]Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

[/quote]

I was only referring here to the loan servicers. That’s where they make their money, collect all their fees, with a completed foreclosure. So their business interest is often at odds with their investors. They often have no skin in the game so maximizing return is sometimes incidental. But they are ill equipped to deal with distressed assets, whether it’s a delinquent loan or REO.

I think the whole “manipulate the books” thing is overblown. To the extent the loans are owned by private label MBS, they have no incentive, none at all. Banks that are subject to FDIC, Treasury, OTS and SEC regulation and supervision? They have incentive, but given the scrutiny they’re under, and the market for the last few years, it would seem unlikely there’s widespread continued manipulation. They were mostly pretty conservative in setting aside loan loss reserves a couple years ago in order to get bad business behind them. Are the GSE’s hiding losses? Maybe. Eh…probably. How much is anyone’s guess, but they make up maybe a 1/3 of the outstanding mortgage market.

As to who forecloses…well it is the servicer. They get the ball rolling, nobody else. The servicers, on behalf of the beneficiary control that process.

[SK in CV]

[quote=SD Realtor]Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

[/quote]

I was only referring here to the loan servicers. That’s where they make their money, collect all their fees, with a completed foreclosure. So their business interest is often at odds with their investors. They often have no skin in the game so maximizing return is sometimes incidental. But they are ill equipped to deal with distressed assets, whether it’s a delinquent loan or REO.

I think the whole “manipulate the books” thing is overblown. To the extent the loans are owned by private label MBS, they have no incentive, none at all. Banks that are subject to FDIC, Treasury, OTS and SEC regulation and supervision? They have incentive, but given the scrutiny they’re under, and the market for the last few years, it would seem unlikely there’s widespread continued manipulation. They were mostly pretty conservative in setting aside loan loss reserves a couple years ago in order to get bad business behind them. Are the GSE’s hiding losses? Maybe. Eh…probably. How much is anyone’s guess, but they make up maybe a 1/3 of the outstanding mortgage market.

As to who forecloses…well it is the servicer. They get the ball rolling, nobody else. The servicers, on behalf of the beneficiary control that process.

[SK in CV]

[quote=SD Realtor]Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

[/quote]

I was only referring here to the loan servicers. That’s where they make their money, collect all their fees, with a completed foreclosure. So their business interest is often at odds with their investors. They often have no skin in the game so maximizing return is sometimes incidental. But they are ill equipped to deal with distressed assets, whether it’s a delinquent loan or REO.

I think the whole “manipulate the books” thing is overblown. To the extent the loans are owned by private label MBS, they have no incentive, none at all. Banks that are subject to FDIC, Treasury, OTS and SEC regulation and supervision? They have incentive, but given the scrutiny they’re under, and the market for the last few years, it would seem unlikely there’s widespread continued manipulation. They were mostly pretty conservative in setting aside loan loss reserves a couple years ago in order to get bad business behind them. Are the GSE’s hiding losses? Maybe. Eh…probably. How much is anyone’s guess, but they make up maybe a 1/3 of the outstanding mortgage market.

As to who forecloses…well it is the servicer. They get the ball rolling, nobody else. The servicers, on behalf of the beneficiary control that process.

[SK in CV]

[quote=SD Realtor]Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

[/quote]

I was only referring here to the loan servicers. That’s where they make their money, collect all their fees, with a completed foreclosure. So their business interest is often at odds with their investors. They often have no skin in the game so maximizing return is sometimes incidental. But they are ill equipped to deal with distressed assets, whether it’s a delinquent loan or REO.

I think the whole “manipulate the books” thing is overblown. To the extent the loans are owned by private label MBS, they have no incentive, none at all. Banks that are subject to FDIC, Treasury, OTS and SEC regulation and supervision? They have incentive, but given the scrutiny they’re under, and the market for the last few years, it would seem unlikely there’s widespread continued manipulation. They were mostly pretty conservative in setting aside loan loss reserves a couple years ago in order to get bad business behind them. Are the GSE’s hiding losses? Maybe. Eh…probably. How much is anyone’s guess, but they make up maybe a 1/3 of the outstanding mortgage market.

As to who forecloses…well it is the servicer. They get the ball rolling, nobody else. The servicers, on behalf of the beneficiary control that process.

[SD Realtor]

Yes I understand what you are saying.

It will be an interesting two years. Nonetheless the hopes of an inventory tsunami driven by foreclosures to produce affordable homes in the desireable areas of San Diego seems to have not really materialized.

Maybe inflation and the bond market will have better luck.

[SD Realtor]

Yes I understand what you are saying.

It will be an interesting two years. Nonetheless the hopes of an inventory tsunami driven by foreclosures to produce affordable homes in the desireable areas of San Diego seems to have not really materialized.

Maybe inflation and the bond market will have better luck.

[SD Realtor]

Yes I understand what you are saying.

It will be an interesting two years. Nonetheless the hopes of an inventory tsunami driven by foreclosures to produce affordable homes in the desireable areas of San Diego seems to have not really materialized.

Maybe inflation and the bond market will have better luck.

[SD Realtor]

Yes I understand what you are saying.

It will be an interesting two years. Nonetheless the hopes of an inventory tsunami driven by foreclosures to produce affordable homes in the desireable areas of San Diego seems to have not really materialized.

Maybe inflation and the bond market will have better luck.

[Author]

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