I will post this here in the hopes that it stops me from getting bombarded by people asking "where have all the foreclosures gone?" It seems that there are a lot of people worried they might miss their chance to buy. The shortage of REO properties has some folks worried.
RELAX! This can easily be explained.
Late last year a multitude of foreclosure related legislation was passed. It had the effect of seriously slowing the filings of NODs, the first stage in the foreclosure process. If you look at the NOD numbers, they crashed big time in Sept, Oct and Nov. They shot back up again in Dec once the lenders got the systems in place to deal with the new rules.
It usually takes a home about 6 months to go thru the NOD phase before the NOT is filed. The NOT takes another 1 to 2 months before the home is auctioned (usually back to the lender). So that process usually takes 7 to 8 months from the time the NOD is filed.
So why are there so few REO properties right now. Well, wind the clock back 7 months....... BINGO! Sept of last year. That's when the banks got whammied and the NOD numbers fell thru the floor. And that's why there are far fewer REOs hitting the market right now.
How long before we start seeing REOs hitting the market in numbers again? Looking at the data, the NODs picked back up to near record levels in Dec again. Unfortunately that means the pickings might be slim for another 3 or 4 months. But come August, Sept there should be a big uptick in the REO numbers.
If there are any smart lenders out there they should be trying to expidite the process. After all, interest rates are low, the spring selling season is in full swing and there are buyers out there. If I were a bank manager I would want everything I had on the market NOW. There's a good chance come late summer the inventory will shoot back up putting stronger downward pressure on those prices. Smart banks (oxy-moron) will get the stuff sold now.
If the numbers I saw were correct last month will set a new record for NODs filed at over 50,000. Don't be fooled by the headlines you might read this month. The falling numbers of foreclosures that will likely be reported is a direct result of the 3 months it took the banks to adjust to the new rules. With record numbers of NODs currently being filed it's just a matter of a few months before the false hope wears off.
I do now how some of you feel though. It's frustrating as all heck right now. There ain't squat hitting the market as of late.