bostonbubble.com

[StallionMang]

There's a story ("Banks to unleash flood of REOs") that banks are holding back foreclosed properties to (1) not have to realize losses and (2) get that sweet TARP money. Some people claim 75% of REOs have not hit the MLS.

I emailed a friend who is a REO attorney here. Their response:
---------
That may be true some places, but I don't think it really applies here. We usually get referrals almost immediately after the foreclosure sale and the properties are listed fast.

The big holdup is when there's an eviction, they don't list the property until it's empty.

There *is* about to be a big increase in REO inventory around here, but that's because so many foreclosures were put on hold during the holidays and now they are going to sale.

[JCK]

I think this "shadow inventory" idea is somewhat of an urban legend. I agree with your REO atty friend. From my quick look into this issue, I don't think there's a secret foreclosure inventory that's being hidden from the market.

You can search foreclosure deeds at the registry yourself. It's all publicly available on the web.

If you don't want to deal with the registry, other websites, like Trulia, link to properties undergoing foreclosure.

[Guest]

i believe there is a shadow inventory

they simply dont bother to kick people out anymore

hoping Barack OBambi will rescue them .

i check the nortern middlesex register of deeds site daily

and tons of people receive an order of notice

then never get foreclosed upon

and im not even counting the people who simply
dont pay and never even get the order of notice
which is the first step to foreclosure

there are far more people living for free than
you can imagine
.
.

[GenXer]

Guest: If this is so, where are the banks? Something does not add up here. Are there links to this story (and it would be a story all right if it turns out to be true)?

[JCK]

[melonrightcoast]

I don't know about the shadow inventory either. There are enough speculators flipping properties at inflated prices. Still! There was a REO home in very bad condition that was listed in the mid-200s. We were looking at it for a tear-down. The "agent" listing the property said that they had 7 bids on the property. It closed this past week for almost $10K over asking. THE SAME DAY the house closed, the buyer had the gall to list it for $235K over the selling price saying how nice it will be when they finish fixing it up. I really can't help but hope that they lose their shirt.
_________________
melonrightcoast ... are you?

[Mark]

[StallionMang]

^^ Yes, selling would be in effect marking to market.

This American Life did a good episode on what's happening with banks and their balance sheets:

http://www.thisamericanlife.org/Radio_Episode.aspx?episode=375

Act One. The Collapse of the US Banking System Explained in Just 39 Minutes.

Alex Blumberg and Adam Davidson tackle a very tough subject: trying to explain exactly what a bank is and does. They talk to a number of experts about what has gone wrong in banking, but not before bringing us all up to speed on some banking basics, like understanding a bank balance sheet, and a bank’s assets and liabilities, and the squishy business of what banks say about their balance sheets compared to what they are.

Alex and Adam walk us step by step through the complications of the US government buying up bad assets from banks, and explain why, when it comes to footing the bill, the government might just prefer to not be in charge of the very banks it is having taxpayers bailout. From a dollhouse, to a hypothetical bank worth tens of dollars, to the trillions of dollars being spent to keep banks afloat, Alex and Adam talk economy, and where we might be headed. (39 minutes)