Two years of shadow inventory, but everything is peachy.

[nickelcityhomes]

Excellent article yesterday in the WSJ that shows the dike has been plugged by a handful of major banks and HUD. Housing prices for the next three years may be determined by how quickly they pull their finger from that dike. 29 months of shadow inventory is unprecedented.

http://blogs.wsj.com/developments/20...their-sleeves/

It's funny that NAR hasn't mentioned any of this to their paying dues members. It's full speed ahead into a rainbow with happy leprechauns and unicorns.

Market conditions should eventually flush the commission turds out of the real estate business, especially around here. NAR (and BNAR) are going to need to reconsider their business plan, tax the left-over agents into oblivion, or STFU and let the people who know how to price homes get them out of this mess.

Why did REO supply drop last year even as more and more people fell behind on their mortgage payments? Because the flow of homes into bank ownership was slowed by time-consuming efforts to figure out which distressed borrowers could qualify for programs that shrink monthly payments in an attempt to avert, or at least delay, foreclosures.

Make no mistake, there was never a legitimate attempt to alter loan payments or efficiently process short sales. A few "low fruits" made it through the process, but the banks never intended to liquidate their holdings, even after accepting TARP money. The worst is yet to come.

[MarkLV]

So basically there is a looming "second flush" of No-Doc/Subprime ARM's soon to be offered for sale?

Thats been on my mind since the original mortgage meltdown. How are these mortgage banks going to liquidate their REO properties, and when?

And what is the maturity schedule for those mortgages whose teaser rate are due to reset in the next year or so? Some were not even originated until 2009 when the crisis peaked. Also, what about HELOC loans? Many people have been paying their mortgages with HELOC funds, if they havnt already been cut off by the lender.

This could allow dubious lenders a second bite of the apple they sold to unsuspecting home buyers. Your home equity goes negative, and we auction it at current market value, which forces the prior owner to go into debt towards the lender for the unrealised amount. Talk about a viscious cycle.