patrick.net

tatupu70 says

Goran_K says

If you don't question the accounting ethics of the major banks, you have to have blinders on.

There's a big difference between accounting ethics--making questionable interpretations of the standard-and outright lying to the SEC.

Painting the two as if they are the same is a bit simple.

The outright lies are submitted on pictures of porn. The SEC guys are so distracted they'll never notice until the statute of limitations runs out.

I have tatupu70 on ignore, but his point implying that banks don't outright lie to the SEC is laughable.

Ken Lewis cost Bank of American tens of millions of dollars in settlement money because he lied to the SEC about whether the bank had mislead shareholders about year end payouts.

tatupu is simply ignorant of how banks operate. They lie, a lot (and this is coming from someone who made a lot of money working for those institutions).

Goran_K says

They lie, a lot (and this is coming from someone who made a lot of money working for those institutions).

So you are a liar then?

WhyPee says

I dunno. 25 MILLION excess empty houses in the US? Call them shadow inventory.... or whatever else you want.

25m? Ha, ha. Why buy now when you can....?

SubOink says

So you are a liar then?

If I was in a situation to profit as much from lies like the major banks, I may have become a career one. Remember, the banks lying has nothing to do with them being Dr. Evil. They simply do it because the profit/penalty ratio is highly in favor of lying.

What of the folks that bought at 350k+, and their house is now supposedly only worth 150k? And that's in figment of your imaginary valuation land. If they were all to sell those houses tomm, what would they sell for ?(isn't that what they are 'worth')?

If the banks weren't being dishonest, then we wouldn't see mark to myth valuations temporarily keeping them solvent. Let's have the banks mark their mortgage assets to market, and let's have those who'd like to, and those that need to, sell their houses. Then we'd know what all this ginormous housing stock is actually "worth"

Again, its been gimmick after gimmick parlayed with perpetually lower interest rates. After this most recent fha gimmick to refi underwater debtors down to these low rates, let's see what happens next. Here in SEPA, properties I looked at in the 150k range a year ago are going for 125k, and stuff I saw a year ago overpriced towards 200k, has dropped in price 10-15% and still sits and sits. There is no shortage of inventory, hence no upward pressure on prices. On the contrary, there's much uncertainty, peoples credit scores are dinged, private debt levels are high, and the appetite for levering oneself for extra sq ft just isn't there. 4$ home heating oil heading into fall is always sobering as well

It doesn't look like the shadow inventory is out there because of a high population of squatters that are not given the boot. Personally, I know many people in the BA that haven't paid a cent for quite a while. In some cases over a year. Now, that is the best way to live in a high income area! It'll come to a crux at some point. I envision it as a leaky boat with a bunch of bankers trying to bail her out. However, the bailing buckets are also full of holes. You can fill in the conclusion. No bail for you!

RentingForHalfTheCost says

It doesn't look like the shadow inventory is out there because of a high population of squatters that are not given the boot. Personally, I know many people in the BA that haven't paid a cent for quite a while. In some cases over a year. Now, that is the best way to live in a high income area! It'll come to a crux at some point. I envision it as a leaky boat with a bunch of bankers trying to bail her out. However, the bailing buckets are also full of holes. You can fill in the conclusion. No bail for you!

I just offered on a house in an area I am looking in. The owners defaulted in 2009, and haven't paid since then, even the bank is paying the tax on the property to prevent the county from taking the home. Low chance I'll get a short sale package done with these "owners" playing every game they can to stay in a home rent free.

But for someone to suggest "shadow inventory" doesn't exist, has to have some pretty big blinders on.

wave9x says

To parse out the interesting part...

A year ago, banks were sitting on 8,652 homes in the four counties of the South Bay and East Bay. Last month, that had dropped to about 6,200.

Did the properties actually sell or just change hands?

Call it Crazy says

tatupu70 says

dodgerfanjohn says

How do you know they are paying their mortgages?

If not, they'd be delinquent.

If there has been no NOD filed, how do you know? Did they call you and tell you??

Isn't a NOD a part of public record? Anybody can go to the recorder's office and check if there's a NOD for the property that dodgerfanjohn posted.

but really what would be the point? It's just one property in one person's anecdotal story.

New renter says

That's my point. Few people get the insurance as it tends to be very expensive and covers little. Unfortunately homeowners insurance does not cover damage caused by an earthquake.

Wow. Just...wow.

Nothing like paying $500k for a house and then losing it all in the next earthquake.

Then again, most houses I saw in the Bay Area were not worth much more than 50k-100k if talking structure alone. It's just the land that was so expensive.

Goran_K says

But for someone to suggest "shadow inventory" doesn't exist, has to have some pretty big blinders on.

What's new? Fact is,there are loads of houses which are not under any radar. Post election year would be interesting. I wonder if things are turning around why are most state and city govt. going broke?

ptiemann says

They did chimney repairs etc after the earthquake but the insurance company did not pay them as promised.

I guess that's why Buffett likes the insurance biz. Promise to pay, then don't! It's a good racket.

"Some would strictly define shadow inventory as homes that have actually been foreclosed upon but not resold yet by the banks. The most conspiratorial of us believed that banks were indeed sitting on thousands of homes in an attempt to hold up prices. I was actually working with the banks at that time, selling REOs, and I can tell you this was never the case."

http://bayarearealestatetrends.com/2012/08/19/no-banks-arent-holding-the-shadow-inventory-they-never-were/

The real estate agent who occasionally unlocks doors to show me places called to check in after a few months. I told him I was fine and not interested in any of the crap on the market. He then blurted out that prices are NOT going down and there is no "shadow inventory" to which I had zero reply.

I had never discussed "shadow inventory" with him before. Maybe he's got too many clients reading this thread. Or he stalks his clients on Patrick.net. ;p

War says

Call it what you want. With 25 MILLION excess empty houses in the US today, why bother buying now? Buy later as prices continue to crater for 65% less.

Realtors are liars. Prices are falling.

gregpfielding says

I was actually working with the banks at that time, selling REOs, and I can tell you this was never the case."

Yes, and you know a lot more about these things than either CoreLogic or RealtyTrack who report more than 90% of REO inventory is kept off the market:

http://realestate.aol.com/blog/2012/07/13/shadow-reo-as-much-as-90-percent-of-foreclosed-properties-are-h/

Call it Crazy says

It's been quiet here without those past posts, don't start......

"Mr. War" sounds a lot like "Realtors Are Liars."

I think the author misunderstands what "Shadow Inventory" is.

This government has been doing all kinds of gimmicks just to keep people from foreclosing, all kinds of programs, rate reductions, etc... but that only lasts until money runs out.

And I tell you, it feels like the markets are overly saturated with all kinds of wanna be clueless investors and properties that plenty of people would rather give up on just to go move on with their lives.

I personally know "investors" who have lost money flipping houses over past year. That's a sign of a slow down.

dunnross says

gregpfielding says

I was actually working with the banks at that time, selling REOs, and I can tell you this was never the case."

Yes, and you know a lot more about these things than either CoreLogic or RealtyTrack who report more than 90% of REO inventory is kept off the market:

http://realestate.aol.com/blog/2012/07/13/shadow-reo-as-much-as-90-percent-of-foreclosed-properties-are-h/

Lies, damned lies, and statistics.

Further in the article, they admit that 48% of the homes not for sale are because they are still occupied or rented. Fannie and Freddie have been more willing to let existing renters continue to stay in the properties, beginning about a year ago.

They say that 10-15% of the REOs are actively for sale at any given time, implying that 85%-90% are purposely being held back. This is largely not the case. From the time a property is actually foreclosed upon, it can take anywhere from 3-6 months to get that property vacant, cleaned up, valued, and put up for sale. Considering how quickly most REOs are selling nowadays, it makes total sense that the lion's share of the REOs are in the prep process, versus those actually for sale.

There are also probably some REOs not going to market because they are going to be packaged and sold in bulk to institutional investors, a new program that started this year.

Usually the only time that a bank will hold a home it already owns is when there is a legal issue. Or perhaps a title issue. Vacant homes are a huge liability and banks want them off their books as quickly as possible.

There is another mistake in the article. It says that banks recognize the loss only when the home is resold. The bank actually recognized the loss at the time of foreclosure, assuming that the foreclosure "sale" amount was lower than the note, which it almost always is. Any additional losses or gains against that number are recognized at resale.

For some more insight on shadow inventory, I would recommend reading some of Sean O'Toole's posts from ForeclosureRadar. I trust his insight far more than the dudes at CoreLogic or RealtyTrac

http://www.foreclosuretruth.com/blog/sean/shadow-inventory-confusion-reigns/

http://www.foreclosuretruth.com/blog/sean/the-swell-is-huge-no-waves-in-sight/

freak80 says

Then again, most houses I saw in the Bay Area were not worth much more than 50k-100k if talking structure alone.

I absolutely agree. 50k-100K = -50K for the structure. That would be the cost to tear it down to just get access to the land. Remind me of the home owner I talked to back in 1999 when I was interested in buying in the BA. A house in Redwood City was forsale for $400K. Then across the street (I mean right across the street) there was a mirror lot for sale. I figured I would check it out so called up the realtor. The price, $500K! Huh, I told him I can get the same lot with a house for $400K across the street. To which he said, buying just the land would save me the trouble of tearing down the crappy house. Wow. Guess what, that house is still there today and probably would sell for double and actually should be worth half of the 1999 price. Termites have been munching for 13 years on the studs!

Ptiemann,

Let me try to understand it. Sean O'Toole has been saying there is no shadow inventory since November 2009, and there will be no waves of foreclosure insight? It's been almost 3 years now, and we're still talking about the same issue. Interesting.

Give it sometime. The BEARS will eventually be correct. Kind of like people calling for a housing bubble since 2000, and they were eventually correct in 2007. :)

RentingForHalfTheCost says

I absolutely agree. 50k-100K = -50K for the structure.

lol. I meant "50k to 100k" but I think you have a point!

War says

Eventually they'll be right.

Yes, except, only their children will know it.

robertoaribas says

Except in reality... In reality, as evidenced by case-shiller, and many other indices, prices in quite a few areas are increasing...

Only within the last 4-5 months, which even most agents will attribute to seasonality coupled with the low inventory. We'll see how things go the next 6 months.

War says

robertoaribas says

War says

Give it time. The perpetual bottom-calling by the Housing Pimps will continue. Eventually they'll be right.

Prices continue to fall in the mean time.

Except in reality... In reality, as evidenced by case-shiller, and many other indices, prices in quite a few areas are increasing...

The reality is a few months of peak seasonality is being misrepresented as the trend by you realtors.

Now why would you realtors do that?

And why would you continue to keep dodging your bans only to post the same exact things over and over again?

War says

Bigsby says

And why would you continue to keep dodging your bans only to post the same exact things over and over again?

And why would you continue to lie to the public over and over again?

Are you a Liar?

I see your auto-response machine is still functioning.

War says

Speaking of Liars......

Speaking of Realtors...

War says

Bigsby says

I see your auto-response machine is still functioning.

I see your lies are still flowing.

What lies would those be?

War says

Playing stupid merely makes you stupid.

Something you've mastered. Again, post some links to the things you think I've been lying about.

War says

Post some links to the the things you believe you've been truthful about.

Just read everything I post. Those are my opinions. Point to the ones where you think I'm lying. As we all know you'll just post some tautological comment or other, why not just explain what you think my views on housing are.

ptiemann says

Not to discredit the statement, but were you aware of these 2 articles' posting date? (2009 and 2010?)

Nothing, as far as how the bank view REOs, has changed since then. There are lots of programs to prevent (or delay) foreclosures, but once the bank owns them they want them off their books asap.

E-man says

It's been almost 3 years now, and we're still talking about the same issue. Interesting.

Because for three years (4 this fall) the conspiracy has only been speculated, never proven. Again, there is an enormous shadow inventory, but little of it is secret REOs.

War says

Playing stupid merely makes you stupid.

Call it Crazy says

gregpfielding says

Again, there is an enormous shadow inventory, but little of it is secret REOs.

That's because they are sitting in the Neverland between the filing of the NOD and Lis Pendens and the official court transfer back to the bank (specially in the judicial states). They sit empty, waiting to enter the official REO fleet!!!

Yes. I agree. That's been my point.

I'm just going to point out again that there are absolutely zero reasonably accurate statistics on mortgages that have not been paid on for one or more months, but have yet to receive a NOD.

Everyone wants stats proving or disproving shadow inventory, but those stats don't exist. If they did, there would be no threads arguing this subject.

At least in California, those homes are not empty. But many of them have 5 years of listing and delisting, accompanied by multiple listing price fluctuations that seemingly have no rhyme or reason........

The current arguments supporting the notion of a huge amount of shadow inventory very much carry the feel of those arguing we were in a bubble back in 2005.

gregpfielding says

E-man says

It's been almost 3 years now, and we're still talking about the same issue. Interesting.

Because for three years (4 this fall) the conspiracy has only been speculated, never proven. Again, there is an enormous shadow inventory, but little of it is secret REOs.

East Bay Real Estate Agent and Blogger

So Greg, where do you think we will go from here? Low inventory for years to come with home prices muddle along, or there will be a wave or waves of foreclosures hitting the market to drive prices lower, or foreclosures will be sold in bulk through the back door to institutional investors, or..........???

TIA for your response.

E-man says

o Greg, where do you think we will go from here?

Find a plot or a tear-down and build you a custom home. With costs what they are these days, you could build a fabalous house with a high dollar finish out.

HUD chief confirms there is no "shadow inventory":
http://www.latimes.com/business/money/la-fi-mo-shaun-goes-west-20120822,0,2090315.story

But I suppose that won't convince the paranoid conspiracy theorists on here.

wave9x says

But I suppose that won't convince the paranoid conspiracy theorists on here.

Thank GOD we cleared that up.

I guess I could post a link to Michael Olenick's site and then say something like, BUT I guess it won't convince all the Tru-Believers on here...bunny quotes and all...but that would be lame.