~ I received the below article in an e-mail from one of my associates that does a lot of REO listings ~ The comment in Italics is what I've been saying alllllll along!
Where is REO Market Heading in 2012?
In the rollercoaster world of bank owned properties, now might be the time when the ride starts to take a drastic turn. Many analysts projected 2011 as the year when the backlog of foreclosure cases would hit the market, but this did not occur, leading to a lot of speculation about the future of these properties heading into 2012.
Ivan Choi, senior vice president of Austin, Texas-based Matt Martin Real Estate Management, said the REO industry will continue to struggle in 2012 similarly to last year because lawsuits, legal actions by state attorney generals and the aftereffects of the robo-signing scandal are still hitting lender-servicers.
“We may have a repeat of 2011 where we're in a little bit of a standstill where REO inventory that's actually offered for sale on the market is going to be relatively low compared to the overall number of foreclosure cases,” Choi told MREO. “This could be the year that the backlog of foreclosures comes into the market in the form of REO or short sales, but I don't believe there will be an influx of REO into the market in 2012.”
Choi noted that the foreclosure process is much more stringent now than it was last year or even five years ago, making it harder for a bank to issue a foreclosure against a distressed borrower. He said banks and servicers are “deliberately” moving slowly through the foreclosure process because they don't want to be blamed for any errors that might occur.
One way to possibly move the process along more quickly is for banks and servicers to mark down, from an accounting standpoint, the value of assets that they have in default, Choi said.
“There is no hammer in driving them to take a loss and put the property through the foreclosure process. Instead, they have leeway to hold it on the books because then they don't have to realize the actual value of that asset which would affect their accounting,” Choi told this publication.
Choi said a stabilized economy, and not mortgage servicers, would be the key to any improvement in the housing market. “The way to get out of this crisis is for unemployment to go down and the overall economy start to recover,” Choi said. “As long as the economy is healthy and people have jobs, which allows them to acquire mortgages and real estate in the first place, that will dramatically decrease the foreclosure problems we have today.”
I tend to agree.....thoughts?