We've all seen the homes sitting empty in our neighborhoods for months. Chatter among agents has rumors flying around about how the banks have foreclosed on these properties but that they've collectively decided (or have been asked in back-room talks with government officials) to hold them - artificially restricting supply and propping up values.
I was at a short-sale symposium last week and heard Ivan Choi speak to this issue directly. Ivan is now a Senior Vice President, REO Financing Services for Prospect Mortgage. He was previously with Countrywide / Bank of America's REO division.
According to him, the inventory that has not been released to REO agents for sale is working its way through internal systems and audits which now require many additional attempts by the bank to contact the defaulted borrower to see if they qualify for any loan modification programs. So while there has been a slow-down, we shouldn't expect a flood of REO properties to hit the market. They just got caught up in a traffic jam and it will take awhile before they work through all of them.
Is this true in your area? I'm interested to hear your take on it.
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