http://blogs.wsj.com/developments/2010/03/19/how-many-homes-do-banks-have-up-their-sleeves/
check this out!

My favorite:
"If no additional loans default and only the current inventory of nonperforming and REO loans eventually must be liquidated, it will take 29 months to complete. This estimate of 29 months does not consider loans that have yet to default or, more significantly, those that have recently cured."
Standard & Poor's article in Feb 2010 about shadow inventory.

They forgot to mention that the sleeve is circular and self-replenishing thanks to loan programs out there from fannie mae and FHA. We should take a moment of silence and thank them for those programs, without which there would be no job security.

The looming so called “shadow inventory” should cause some investors to be wary with a possible 20 percent downward correction in prices. If the Fed keeps it word to stop buying mortgage-backed securities at the end of this month, doing so may force some banks to offload more properties at a discount in order to free up cash to make new loans.

You got to read this:

"Obama: Give HAMP a Chance

The Obama Administration is drafting a proposal that would prohibit foreclosure on delinquent mortgages until servicers get a chance to evaluate a borrower for the Home Affordable Modification Program (HAMP). The Administration would give borrowers an extra 30 days after receiving the HAMP non-approval notice before the foreclosure sale can proceed. Servicers would not be required to solicit borrowers if they've have filed Chapter 7 or Chapter 13 bankruptcy, unless an evaluation is requested by the borrower. Borrowers already in a trial plan cannot be denied a permanent modification because of a subsequent bankruptcy filing, and the trial period can be extended up to five months. The proposed guidelines also define a "reasonable effort" for servicers to recruit borrowers into the program. There must be at least four telephone attempts over a period greater than 30 days, and the servicer must send two written notices, with at least one posted certified return receipt. November 2009, the Treasure estimated 375,000 permanent modifications would actualize by the end of the year. To date servicers provided 116,000 modifications. However, and additional 76,000 permanent modification have been offered and are waiting only for the borrower's. In total, over 1 million homeowners have started trial modifications and nearly 1.5 million offers for trial modifications have extended to homeowners"

Gee let be part of the program!!!

HAMP has been an unfortunate failure. Some analysts estimate there will be 5-6 million properties added to the 1.5 million already in foreclosure in the next 120 days. BPO business should double by the summer. Real unemployment will have to return to around 7 percent or lower before there is some semblance of balance exits in a market inundated with distressed properties.

i dont care how many they have, as long as they give me 100 of them per year that actually sell.....

Hey I will settle for 75 a year - I know there are that many sitting vacant here and not on the market - I wouldn't be displacing anyone - in fact I would be doing the banks a service by "preserving their interest in the property".

Ever wonder why our states are having budget problems? With all these people in default, how many of them are still paying their real estate taxes?? Exactly, none. One major way California gets budget money is from taxing homeowners. The federal government is holding up foreclosures. We can't get paying homeowners in who will also pay real estate taxes.

JMHO.

consipiracy theorists unite-Here's one for you to ponder...The banks had been making a push to get into real estate sales just before REO went hot in 2008. When they lost their fight they sent out the boom of REOs in 2008. Hell, I sold over 100 REO's that year.

Now the 'Shadow Inventory' has grown to monumental status and what do you think would happen if the Banks decided to make a full push to get back in to Real Estate? the FDIC has been incentivising banks to agree to short sale & modify loans on some of their inventory (the lower valued properties) to increase the percentage of 'Short Sales & Loan Modifications' that qualify them to receive the $$ incentives offered by the gov't for gains from REO sales(on the higher valued properties_ (see the Indy Mac Slap video).

What kind of power do you think that the Bank Sellers have created for themselves by honoring the moratoriums of 2009 and the REO 'stall' in 2010. Lots of smoke and mirrors... lots of distractions...don't look over here...look over there!

Fear the implications of the acutal release of the 'Shadow Inventory' and what it means to property values vs. if the Banks get in to Real Estate and agree to limit the release of properties so as not to start a panic or a big sell off on the stock market....We're being set up at our own expense.

In my opinion banks have no shadow inventory. When they finally take them back as REO they sell them as quickly as they can.

I believe one of these banks is going to wake up and realize the moratoriums are costing them millions and start the next wave. One smart bank taking them back and selling them in this market will bust open the REO dam.

One servicer that I know of already lists it's REOs thru one broker in state but it isn't going to well for them. You just can't beat a local REO agent that knows the market and can sell the homes quickly for good prices. Oh, and guess how often they check their REOs? Never......

I do believe they have a ton of shadow inventory. I define shadow inventory as properties that are vacant, have been re-key, winterized and sometimes trashed out. They have never been listed for sale, they just sit there vacant. Why do I believe in shadow inventory? Because in the last couple of months, I have been assigned one property that was winterized in 10/2007, one that was winterized in 8/2008 and two others that were vacant, not winterized - but re-keyed and in talking to the utility companies had not had service for well over a year. Thats just me and I do not have a huge amount of inventory - so its not like I am talking about 4 listings out of 200 - I can tell you without a doubt - its out there. Do a search of tax records - pick a bank - any bank and search to see how many properties are in their name. Note the date they were transfered and then check the MLS. You will find properties that are in the bank's name, never been listed - I call that shadow inventory.

if anyone wants to see that infamous shadow inventory---get realist and just look through your county--
you see what homes are preforeclosure and what are bank owned--
this is not some nuclear secret to guess and ponder or superstition fortune teller secret where you try to throw darts in the dark to predict something that will never come.
banks are not going to dump a load on the market--it just will not happen again.
right now i am seeing fair market and short sale prices lower than some reo prices.
the end has come and gone--the resurrection has happened and all that is left is us sinners--so if you are reading this--you missed the last train to Jordan--
so i would suggest getting on the short sale train or back into that good old fashioned shuck and drive real estate caravan--or you can stay in your fruit cellar and watch Beck and Palin and wait for an Armageddon that will not come--
personally—I choose to pop my head out and see things for myself—and where I am –things are looking pretty goo—heck—I may even get health care this year!
so for newbies trying to figure out the next move?
don't wait for the end---get moving now while many are still in the trenches waiting for a flood--that will never come!
(while there may be many home still out there vacant? there are plenty of guys with deep pockets ready to buy them--they will never make it to market)
if people are looking to who is 90 days late to predict the next wave of reos---
they are reading the wrong tea leaves--
currently banks are lower rates and actual balances on loans--IF YOU ARE AT LEAST 90 DAYS LATE--
these people do NOT want to lose their home and if they have not lost it by now--chances are they will be able to keep it! but they sure want to get government help if they are upside down--
there is a bigger picture out there--population is increasing--many americans have money are are not afraid to buy homes--housing prices are back to where they should be and there are plenty of buyers--
so--again--do not listen to the fear merchants--i can sale my house for 25k more than i paid for it 60 days ago--and i expect to make 100k within 24 months!
people are behind on mortgages now because they have been given an incentive to be--it will soon end!
by this time next year---everyone will be talking about the home they should have bought in 2009 and 2010--

Joe - you're a hoot - that's for sure!

You write to an imaginary audience and too offend as many people as you can - for who knows, your reasoning?

You say one thing and when you find yourself alone on you stance you change what you believe and regurgitate what you learned form us in an insulating manner design to offend as people in your efforts as you feel you can, but the truth is, the only person taking you serous is yourself.

Joe - we enjoy watching your transformation and in teaching you what what the real experts know is happening, and we know who that expert is not.

Have a Happy Easter and enjoy the good weather - hopefully everyone will have at least part of the day to enjoy a moment or 2 of good weather, and a beautiful day, especially you Joe.

Here's another thing we have been trying to teach you keep forgetting to regurgitate, 'Real Estate Is Local', what is happening in your market may not be the same for all markets.

Markets are complex with many depended factors, such as employment in your area, tax structures, state laws, discretionary funds, weather, and those ever changing 'trends'.

When Obama's taxes hit us, in the form of increased fees and charges to conduct our business or any business, when prices, those general prices for goods produced, increase to cover the costs of the changes needed that are now mandated for businesses by law, to pay for this administration's hidden taxes on businesses, we'll see just how smart he and you both are. It won't take long long either

Have you heard the latest - congress is demanding for corporations to explain why they have filed to amend the projected profits for the year, as is required by law, just because it will show the true cost of this to the American public? Congress is demanding that corporations come before congress and explain why they are doing what the law regulating them requires them to do, and it appears it is being used as a threat to corporations, but I think congress are about to face reality.

Yep - there are no few rides - even in a Socialist Society experiment, I'm just about expecting to see the history books be rewritten and all other contrary books burnt then the next to go will be our religious freedom. (LOL - I had to give Joe something )

Short sale prices are lower then reo prices and in my area, I am calling the short sale listing agent and telling them, sorry,the bank bought it back, and now I am the agent. Banks will not sell houses for less then they think they are worth, short sale agents are listing them too low, but I disagree with the thought that those of us waiting for the flood are wrong. The reos are coming onto the market, we are just waiting out the latest "fix it" from the gov't. Will it mean we all need waders - no just those cute little rain boots with the polka dots will work. As far as folks keeping the house - I have three evictions in process, and I am sorry, but the folks who are playing the "I can't pay, I need help" game are not winning. Those who truely need help, may get it, but not the folks who took out two mortgages and spent it on the boat in the driveway. Prices may be evening out, and I don't have a problem with that. It does not mean the reo business will vanish, it does not mean we are all going to starve - thank goodness I am in the friut cellar - I have apples, and a tv. Pass the carmel dip.