The foreclosure process has slowed down but the steps in building the shadow inventory has remained the same. The first step in the foreclosure process is someone has to be 90 days delinquent on paying their mortgage. The foreclosure process is initiated and then the bank forecloses on the property.
The house becomes a REO on the market or the house is owned by the bank and not yet ready for sale --- the shadow inventory.
The map illustrates the shadow inventory by state. It seems that the shadow inventory has increased over the past year. Thus, the supply of homes on the market is manipulated by withholding these foreclosures.
Once the foreclosure has been listed for sale, I am finding that home buyers are having a difficult time winning bids. Why ---- investors with cash! The banks are rejecting home buyer offers and waiting for investors that offer cash. The bank would rather take the money and run and not offer a mortgage. The bank also removes a liability from their books.
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