Real Estate Owned (REO) Are They the Shadow Inventory?

October 26, 2011


I recently received a news letter from DSnews.com that cited a study done by CoreLogic. The study looked into what was the final resolution for properties that the banks repossessed. I quote from the article.


"In 2006, just as the housing bubble popped, over 355,000 properties proceeded through the foreclosure auction. CoreLogic's data shows that approximately 34 Percent (122,000) were successfully bid on by an investor. The remaining 66 percent (233,000) went back to the banks as REO properties.


Of the properties that went into REO, CoreLogic reports that90 percent (210,000) were liquidated in REO sales to third party buyers.Nearly half of these sales took six months or less to complete, but 21 percent took 12 months or longer."


" CoreLogic also found that only 2 percent of the bank-owned homes bought with a mortgage in 2006 have since been foreclosed on again and made an appearance as REO. "


Admittedly the data studied was from 2006 and we are now in 2011 with foreclosures still apart of our real estate inventory. Perhaps the new and revised HARP plan will have an impact and underwater homeowners will be able to live without the threat of foreclosures impacting their lives.