REO Listing Trends: Foreclosures Continue to Rise
Real Estate

REO Listing Trends: Foreclosures Continue to Rise

Experts predict elevated levels of foreclosures for the next three years

Just when everyone thought mortgage defaults couldn’t get any worse, it did in the second quarter of 2009. It’s now clear that REO properties will continue to be a major factor on real estate listings for at least the next three years. Rising unemployment is now predicted to be the primary factor rather than the unstable subprime mortgages that helped create our current economic crisis.

Now, as predicted, homeowners who had strong mortgages based on good credit are having trouble making payments, due to more job losses and cutbacks in hours for employees who keep their jobs. Mortgage defaults are at their highest levels since the Great Depression, with 4 percent of homeowners in foreclosure and another 8 percent who are at least a month behind on their payments.

The last time the housing market fell this low was in the early 1980s. During that recession, as is often the case, it was a rebound in the housing market that helped the economy out of its slump. nosedive. But leading officials like Wells Fargo Securities senior economist Mark Vitner say this recession is different and doesn’t see that kind of housing recovery on the horizon. In fact, he predicts that this trend will continue for at least 3 more years.

Currently, refinancing is not an option for many troubled homeowners because home values ​​have fallen so far, meaning they owe the bank much more than their property is currently worth. Although many banks and lenders are beginning to offer loan modification programs, many homeowners can’t even afford lower payments because they’ve lost their jobs.

This year, one and a half million homeowners are facing foreclosure. And those numbers are expected to go up, not down, because many of the homes currently in foreclosure have yet to hit the market as official REO listings. Paul Puryear and Buck Horne of the Raymond James financial services firm say, “Of the more than 4 million homes currently owned by lenders, in foreclosure, or seriously delinquent, approximately 1 million are captured in the NAR (National Association of Realtors) inventory data and listed as ‘distressed inventory’ in MLS.”

New home construction is certainly not better. The National Association of Home Builders released its new report, and every aspect of its housing market index remains well below the worst levels ever seen in the report’s more than 20-year history; in others, it is firmly in uncharted territory.

All of this suggests that the number of REO properties will reach even higher levels in the coming months. There will be more foreclosures than all the experts predicted and banks and lenders will have to find new and innovative ways to more efficiently get those properties “market ready” and listed with REO agents to avoid incredible glut. .

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