REO Listings: Current REO Inventory Will Take 40 Months To Clear
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by: MattCBA
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Fitch Ratings, a global credit rating agency, now estimates that the huge “shadow inventory” of REO properties still being held by lending institutions will take at least 40 months to process and sell.
With an estimated 7.5 million REO homes yet to be listed, it will take some time for major banks to liquidate these properties. Of all the family home loans JPMorgan Chase holds, for example, one out of every thirteen are in foreclosure today for a total worth of $20 billion. Currently, it takes roughly 18 months for an REO home to be processed and resold, from the date of the last mortgage payment.
These numbers all but guarantee that REO listings will continue to account for a huge chunk of all real estate sales for at least the next three to four years.
A new spike in foreclosures will also add considerably to the overall REO inventory. Ongoing foreclosure actions are beginning to experience big jumps in other areas across America. While most of the attention has gone to Florida, California, Nevada and Arizona – the “big four” which have experienced the biggest surge in REO properties over the past few years – other cities and states are suddenly seeing dramatic increases.
In the third quarter of 2010, foreclosure actions (which include everything from default notices to actual bank repossessions) rose in 65 percent of the country’s top 200 housing markets. Seattle saw a 71 percent jump, Chicago a 35 percent jump and other cities such as Houston and Atlanta also saw double-digit increases. When it came to actual bank repossessions, Boise, Idaho saw a 71 percent jump and Philadelphia saw a 38 percent rise.
Unemployment seems to be driving these new numbers – and it’s also affecting the number of prime mortgage delinquencies in recent months, which are also up sharply. The managing director of the applied analytics division at Lender Processing Services, Kyle Lundstedt, said current mortgage delinquencies are above 7 million.
Loan modifications aren’t helping distressed homeowners either. It was recently reported that, of the roughly 16,000 mortgage modifications done on Freddie Mac loans in the second quarter of 2009, 42% had fallen back into delinquency 12 months after the workout. Which explains why Freddie Mac suffered a two and a half billion dollar loss in the third quarter and has requested another $100 million from the U.S. Treasury.
REO agents, brokers and other professionals skilled in this specialized field will continue to be desperately needed as this segment of the real estate market continues to dominate in the coming months.
For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists). ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.
Find out more about ASREOS and what it has to offer at http://www.asreos.com.
About the Author
Frank Patrick began his real estate career in 2000 after a 12-year stint in corporate America as a sales manager. As a new real estate agent Frank knew that he wanted to find a niche within the real estate industry. After months of research Frank decided to specialize in REO, an acronym for bank owned foreclosed homes. Frank quickly became one of the top REO agents in the nation averaging over 100 transactions per year for the last 8 years. In 2007 Frank’s production soared to over 214 sales. In 2004 Frank and his brother Scott Patrick started a property preservation company to offer maintenance and repair services to banks with foreclosed homes. Frank’s solid understanding of the REO industry and Scott’s 20+ years in the construction business was a recipe for success. This year their property preservation business is on track to gross over one million dollars in revenue. Today Frank manages his REO Real Estate Brokerage, REO Renegades an REO agent training business, his trade association The American Society of REO Specialists and is developing a national Franchise Property Preservation company, REO ResQ. For more information please visit http://www.ASREOS.com
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