There are many real estate industry leaders who would have one think that the real estate market is turning around and close to hitting bottom.
These reports show that there are way to many homes that have been foreclosed on that lenders have in as shadow market inventory and that there are more homes that are still being foreclosed adding to the inventory. Still, there are more homes that will go into foreclosure, now lenders are trying to come up with a program to help homeowners stay in their own homes as renters.
These facts clearly show that the housing market is no where near to hitting bottom. There are still more years that the housing market will still be experiencing back-logging of homes because lenders are still foreclosing on homeowners.
From our viewpoint, the housing market will come close to starting an upward turn in 2014 or 2015. Don't let the folks who are saying that things are turning around for the housing market because it ain't over yet.
By John W. Schoen, Senior Producer
What do you do if you own more foreclosed homes than you know what to do with —and there are more on the way?
In Bank of America's case, you might want to become a landlord.
The San Francisco-based lender said Thursday it's going to try out the idea of offering homeowners the chance to stay on as renters as an alternative to seizing their properties in foreclosure. The plan would let those families stay on for as long three years.
''Our priority is designing a solution that helps our customer,'' said Ron Sturzenegger, Legacy Asset Servicing executive at Bank of America in a statement. ''If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community and curtail neighborhood blight by keeping a portion of distressed properties off the market.''
Converting families into rent-paying tenants after Bank of America seizes their homes would also help boost Bank of America's bottom line, in several ways.
Many of the homes Bank of America takes back sit empty and require upkeep until a buyer can be found, often at a fire sale price. Renting those homes back to their former owners would also provide Bank of America with a new source of revenue and give the bank more time to find investors to buy the property, helping to avoid slashing the sale price as it works to clear a glut of unsold properties.
Bank of America stock, which was near $5 late last year, was up 2 percent Friday to $9.82.
The pilot program initially will be offered in New York, Nevada and Arizona to about 1,000 homeowners about to lose their properties after they agree to hand over the title to Bank of America. Rents, which bank officials say would be less than the former homeowners' monthly mortgage payment, would be set at market rates, based on independent estimates, according to a bank spokeswoman.
Homeowners won't be able to apply for the foreclosure-to-rent program; Bank of America said it will chose the initial round of potential participants and has already begun contacting some of them to make the offer.
The list of potential renters will likely be relatively short. Even if the pilot program is expanded, only about 10 percent of homeowners whose mortgages are owned directly by Bank of America would be eligible. Not included are the roughly 60 percent of Bank of America's loan portfolio held by Fannie Mae or Freddie Mac, the two big government-controlled mortgage companies. Families with mortgages that were sold off to investors or who have home equity loans would also not be included.
Because borrowers voluntarily agree to sign over their title, the program could also help Bank of America avoid any potential legal hurdles in cases where shoddy paperwork makes it difficult for the lender to prove it owns a mortgage and has a right to foreclose. In some states, increased scrutiny of those documents have slowed the pace of foreclosures. Nationwide, lenders completed some 860,000 foreclosures last year, down from 1.1 million in 2010, according to CoreLogic.
Even with the slowdown, mortgage lenders like Bank of America have accumulated a huge backlog of unsold houses. Five years into the worst housing collapse since the Great Depression, that inventory of seized properties continues to weigh on the housing market and on the price of every house Bank of America tries to sell.
Last month, one in five homes sold in the U.S. were foreclosures, according to the National Association of Realtors. Another 15 percent were "short sales" - in which lenders like Bank of America agree to let a homeowner facing foreclosure sell the house for less than they owe.
The foreclosure pipeline, meanwhile, continues to fill, pushing more distressed properties on the market. Last month, the total supply of unsold homes for sale rose 4.3 percent to 2.4 million, or about a 6.4-month supply, according to the NAR. Housing economists figure supply and demand are roughly in balance with that much inventory.
But there are another 1.6 million homes in the foreclosure pipeline that have yet hit the market, according to CoreLogic, which tracks this so-called "shadow inventory."
"Almost half of the shadow inventory is not yet in the foreclosure process," said Mark Fleming, chief economist for CoreLogic. in a statement "Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines."
Some 800,000 homes are owned by families that are more than three months behind in their payments, another 410,000 are in some stage of foreclosure and 400,000 have already been seized by banks but not yet listed for sale. Fannie Mae plans to auction off 2,500 foreclosed homes next month and expand those sales later this year.
The impact of those yet-to-be listed houses will be felt most severely in just a handful of states where foreclosure are most concentrated: Florida, California and Illinois account for more than a third of the shadow inventory, according to CoreLogic data. The top six states, which also include New York, Texas and New Jersey, account for half of the shadow inventory.
http://economywatch.msnbc.msn.com/_news/2012/03/23/10829814-bank-of-america-renter-program-could-help-its-bottom-line
Another real estate opinion on shadow inventory
By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha). You can follow him on Twitter at @michael_olenick
“Shadow inventory,” the number of homes that are either in foreclosure or are likely to end up in foreclosure, creates substantial but hidden pressure on housing prices and potential losses to banks and investors. This is a critical figure for policymakers and financial services industry executives, since if the number is manageable, that means waiting for the market to digest the overhang might not be such a terrible option. But if shadow inventory is large, housing prices have a good bit further to go before they hit bottom, which has dire consequences for communities, homeowners, and the broader economy.
Yet estimates of shadow inventory, and even the definition of what constitutes shadow inventory property, vary widely. For example, the Wall Street Journal published a Nov. 11, 2011 article, “How Many Homes Are In Trouble?” where values varied from 1.6 million (CoreLogic), to “about 3 million” (Barclays Capital), to 4 million (LPS Applied Analytic), to 4.3 million (Capital Economics), to LPS Applied Analytics, to between 8.2 million and 10.3 million (Laurie Goodman, Amherst Securities).
Why do these numbers vary so much? Even though CoreLogic is generally considered to have one of the best databases of loans, its estimates of loan performance and odds of default are based on credit scores, which is a badly lagging indicator. Laurie Goodman is seen by many as having the most carefully though out model, even though industry insiders are keen to attack her bearsish-looking forecast.
I have a large database of my own, and am familiar with housing and mortgage information sources. I’ve come up with my own tally of shadow inventory and have also tried to analyze — OK — take a stab at – what I call “shadow liability,” meaning the amount of money taxpayers, investors, banks, will be lose if those homes are liquidated. Assumptions using those terms are also in the attached spreadsheet. My analysis comes up with a total close to that of Goodman’s range, 9.8 million using a narrower definition than Goodman’s of what constitutes shadow inventory.
Put more simply, things are actually worse than any of the prevailing estimates indicates, although Goodman is very close to the mark. Current loss experience suggests that this figure is staggering, easily in the $1 trillion range.
Why aren’t those losses more visible yet? Well, evidence suggests that servicers are stalling the foreclosure process, not taking title to and selling these houses. For the lenders, such delay likely allows them avoid the write-offs of both the negative equity as well as the worthless second liens. More generally, it keeps the trillion dollar losses hidden. Lenders aren’t acknowledging their stall tactics, however. When people notice how slowly foreclosures are progressing from initial steps to resale, lenders point at their foreclosure fraud related dysfunction. Lenders conveniently don’t mention that such dysfunction was self-induced, instead blaming borrowers and courts.
http://www.nakedcapitalism.com/2012/01/michael-olenick-10-million-shadow-inventory-says-housing-market-is-a-long-way-from-the-bottom.html
How ‘Shadow Inventory’ Is Killing the Housing Market
Read more: http://business.time.com/2012/02/08/what-is-the-shadow-inventory-how-many-homes-could-be-for-sale/#ixzz1pz2cm3jd
Most housing experts agree: prices won’t rise until all distressed inventory (a.k.a. foreclosures and short sales) is moved through the market. Distressed sales keep prices low because banks want to get rid of such properties asap, and they’re willing to sell at a loss so long as the homes are out of their hands.
Exactly how many foreclosures need to be cleared out of the system is somewhat unknown, however. While about 3.5 million homes are officially for sale at any particular time, millions of homes that otherwise would be for sale are currently off the market. It’s these properties that are known as “shadow inventory.”
There are many reasons why homes that could be for sale aren’t. Some are stalled in the foreclosure process, which can easily take more than a year in some states. Some banks decide against putting certain homes on the market either because they can’t process all their distressed inventory, or because flooding the market would drive prices further down. Technically, shadow inventory also refers to homeowners who would like to sell but are waiting for market conditions to improve.
How much shadow inventory exists? No one knows for sure. Yesterday, the U.S. Department of Housing and Urban Development released the January Scorecard, which reported that the number of homes left off the market decreased from 3.9 million units at the beginning of 2011 to 3.6 million at the end of the year. These figures include homes that defaulted through a Fannie Mae or Freddie Mac loan. While lenders who participated in such loans are required to report data regarding how much inventory is left off the market, other lenders are under no such obligation. Therefore, it’s difficult for housing analysts to estimate just how much shadow inventory is out there at any given time. According to the Wall Street Journal, the number could be anywhere from 3 million to 10 million homes.
About 4.4 million homes were sold in 2011, according to Bloomberg. There are about 3.5 million homes on the market now, and if you were to add millions and millions of shadow inventory homes into the mix, it would take years to sell all these properties to get to a point where the market was “normal.”
Read more: http://business.time.com/2012/02/08/what-is-the-shadow-inventory-how-many-homes-could-be-for-sale/#ixzz1pz1Kp4Dg
Shadow Inventory Video
We just ran across some figures from 
