Skip to main content

Shadow Inventory Looms Large for GSEs, HUD


Shadow inventory held by the GSEs and HUD “vastly” outnumbers REO properties the groups maintain, according to a joint report from the Office of Inspector General for the Federal Housing Finance Agency and HUD. The report further warned HUD and the GSEs must pay close attention to shadow inventory, which threatens to increase their supply of REOs.

For the report, shadow inventory was defined as properties 90-days or more past due but not yet in foreclosure
According to the report, as of September 2012, HUD held about 37,445 REOs in its inventory, while Fannie Mae and Freddie Mac had about 158,138 REOs, leading to a combined total of 195,583.
Meanwhile, the GSEs held 966,649 properties in their shadow inventory, while HUD was found to have 741,384 homes still in the shadows, for a total of 1.7 million properties.
For the GSEs, the ratio of shadow inventory to REO inventory was about 6-to-1, while shadow inventory for HUD was 19.9 times greater than REO inventory.
Given the massive number of homes still hiding in the shadows, the OIG says the number of REO inventories held by the GSEs could increase significantly as the seriously delinquent properties become foreclosed on.
“Even a fraction of the shadow inventory falling into foreclosure could considerably swell HUD and GSE inventories of REO properties,” the report stated.
The OIG also found the number of mortgages past due by a year or more actually increased, rising from 558,761 at the end of 2011 to 655,782 by the end of September 2012.
According to the report, the inspector general for HUD named several areas where HUD did not have “adequate procedures,” such as list prices that were not reduced according to marketing plans, accepted bids that did meet HUD’s flexible threshold, and properties assigned to field service managers even though performance issues were identified, among other issues.
The issues resulted in REO properties that were not competitively valued, longer holding times, sales that did not achieve the highest net return, and properties being assigned to contractors that did not perform at a satisfactory level, according to the report.
To improve FHFA’s oversight and conservator-ship efforts, the report says the inspector general for the agency is implementing an audit and evaluation strategy to monitor performance.
For example, FHFA-OIG plans to assess FHFA’s REO-to-rental pilot program and the agency’s oversight of single-family property inspections from the GSEs.
Through the evaluations, FHFA-OIG will determine if the agency is ensuring the GSEs are effectively managing REOs to maximize financial recoveries and to minimize the negative impact of foreclosures.

Popular posts from this blog

Grass Seed Video

Read more

When Will Bank Foreclosurews ‘Normalize’? Team Thayer #realestate #investor #housing #market #news #oregon

With much of the talk surrounding the housing market centered on “normalization” or returning to its pre-crisis state, one metric which the market is watching is the distressed sales share—the share of REO and short sales that comprise total residential home sales. For February 2016, the distressed sales share declined by 2.9 percentage points over-the-year (and 0.4 percentage points over-the month) down to 11 percent, according to  data released by CoreLogic  on Thursday. At their peak in January 2009, distressed sales accounted for nearly one-third of all residential home sales (32.4 percent) but has been declining steadily since then. By comparison, the pre-crisis share of distressed sales was typically around 2 percent; CoreLogic estimates that if the current rate of year-over-year decline continues, the distressed sales share will reach the “normal” pre-crisis level in slightly more than two years. “Prior to the housing crash, the distressed share of total...
Read more

Bankruptcy Filings Dip Even Lower! Team Thayer #realestate #housing #market #investor #News #oregon

Bankruptcy Filings Dip Lower Nationwide bankruptcy filings were 5 percent lower in October 2016 compared with a year earlier, falling even lower than last month’s reported decrease, according to October 2016 AACER bankruptcy data reported by Epiq Systems. Bankruptcy filings totaled 63,042 in October, which was an increase from September’s total of 64,614, and was approximately 2.4 percent higher than October 2015’s total of 63,042 (an increase of 1,572).  Year-to-date, there have been 656,125 bankruptcy filings nationwide for the past nine months of 2016 (about 65,613 per month), down from 2015’s year-to-date total through the end of October of 700,014 (about 70,001 per month). The average number of filings per day in October 2016 was 3,152 over 20 days, which is an increase from September’s daily average of 3,077 over 21 days. The extra filing day in September compared to October accounts for the slight increase in the number of filings in September; had October feature...
Read more