REO Inventory Rising Again
Sam Kahater of CoreLogic released figures for the number of REO properties in March 2014. The report shows an increase of properties to 430,000 for the month. This reflects an increase of 15 percent from the August 2013 low of 375,000 properties. This rise in numbers can be seen in 46 states across the nation with Idaho seeing nearly double their inventory being available as REO. Maryland came in second, with a 78 percent increase, followed by Nevada, Oregon, and North Dakota.
Khater stated, “”As lenders began to accelerate the foreclosure process in early 2012, investor demand for REO properties began to rapidly increase. Investor demand more than offset the acceleration of foreclosure resolutions and led to a rapid decline in the number of REO properties. However, investor demand began to drop off last September partly in response to the twin impact of rapid price increases and the rise in mortgage rates.”
In addition, the “robo-signing” scandal in 2010 caused services to pushback foreclosure proceedings, which increased the timeline for a foreclosure to work through the process. After the scandal was revealed in September, foreclosures fell by one-third and the decrease continued until early 2012.
“Not surprisingly, the rise in the number of REO inventory coincided with the National Mortgage Settlement, which was signed in February 2012 and provided more clarity and standards on foreclosure resolutions which led to the rise in REO properties” explained Khater. He concluded that while the current level is lower than the period of the financial crisis, the increase of REO properties is a sign of a new phase of the housing market.