Monday, October 17, 2011
Where are the REOs ?
For the last two years everyones been asking “Where are the REOs?”
There’s a whole lot of confusion swirling around that question. How many reasons have you heard ?? There’s probably a little truth in all of them as there seems not be one defining answer. Trying to whittle it down is like trying to get a sip from a fire hose as everybody and their brother has an opinion as to where the REO’s are hiding.
We don’t need to look far to read and hear the number of foreclosres across the country piling up somwhere in an ethereal REO office in the sky.
It's been almost 2 years now since the back-log started. The initial kibosh on liquidating REO's was put on by Obama in an attempt to save the world.
Obama unilaterally put a stop on all foreclosures.
After that didn’t work, in California Schwarzenager put a stop to all foreclosures.
After that didn’t work, the banks put a self imposed moratorium on foreclosures.
Now that all of these measures haven't accomplished a hill a' beans, we are where we are today - REO's piled up on asset managers desks in gray offices with no windows.
..So where are the REO’s ?
First we need to understand how foreclosure properties are held in numerous ways.
They are bundled and held by corporations, bundled and held by private investors, individually held by corporations, individually held by private investors, and directly held by banks. Every holder of these foreclosed properties has their own agenda as to why they are not putting them on the market.
A few the reasons I have heard on the street as to why the REO dam is plugged are: the properties can’t be released all at once lest it further drive down the supply & demand value, investors are waiting for a brighter day for the values to come back, in the case of several investors owning the same property, all involved need to be on the same page as to how and when they are released, robo-siging & unlawful foreclosure litigation ..and a whole slew of other reasons we may never know this side of eternity.
The take away is this; the investors are driving the bus. Personally, if I owned a dirt clod I couldn’t sell it fast enough, as my prognostication is that we have ugly times ahead that are not condusive to higher real estate prices. But the properties are not mine and I am merely a cog in the REO wheel. As to when the flow will start flowing is anyone’s guess. What is sure is that you can only build a house of cards for so long as the inevitable is inevitable. And as everything in life it to will have an end. Till then, fasten your REO seatbelts as there is turbulence in the foreclosure skies ahead.