What’s the Deal with Shadow Inventory?

The subprime mortgage debacle in ’07- ’08 caused an unparalleled number of foreclosures and disintegration of the housing market. Because of this, lenders were left with significant real estate in their portfolios.

Shadow inventory is a term referring for the most part to properties that are in the process of or have been foreclosed on and haven’t been listed or sold as yet. Many of these homes are not being listed for sale by banks who are waiting for market prices to recover. These lenders are also apprehensive of putting too much inventory on the market as flooding the market would further drive down prices, lowering their projected return on investment.

The good news (for the moment anyway) is that residential shadow inventory as of July 2011 decreased a bit to 1.6 million units, which is a 5 month supply of homes for sale. Before you laugh, it is down from the 1.9 million units (a 6 month supply) reported one year ago. Additionally, there was a decline from April 2011 when shadow inventory was at 1.7 million units.

Will this be a continued pattern? One can only hope… The bottom line right now is that movement or sales of distressed homes is slightly faster than the new delinquencies being taken on by the banks and this is encouraging for the time being.

Short Sale Update: A Win for Short Sale Sellers

This month, Gov. Jerry Brown signed SB 458 (Corbett) into law. SB 458 extends the protections of SB 931 (2010), to guarantee that any lender agreeing to a short sale is required to accept the approved short sale payment as payment in full of the outstanding balance of all loans.

Under previous law (SB 931 of 2010), a first mortgage holder could accept the agreed-upon short sale payment as full payment for the outstanding balance of the loan, but that rule didn’t apply to junior lien holders (second trust deeds). SB 458 extends the protections of SB 931 to junior liens. SB 458 contains an urgency clause making it effective upon signing. This should make sellers’ lives a little less stressful after undergoing the hardships that necessitated the short sale.

If you know of someone considering a short sale, give me a call- we’ve assembled a great team of short sale negotiating experts and can equip you with information to make the right decision for you.

Homebuyers Workshop

The National Homebuyers Fund has just released grant funds (up to 3% of the purchase price) to be used for down payments. This isn't a loan and does not have to be repaid. With interest rates and property values at record lows, combined with a program like this, it makes the timing pretty sweet if you're thinking about buying a home right now.

With that in mind, Guild Mortgage and Ventura Property Shoppe will be hosting a Home Buyers Workshop. Information on this new program will be provided as well as the "ins and outs" of making an offer on a short pay or foreclosure (bank owned) home.

Since buying or selling a home is no doubt one of the most important investments one can make, it makes sense to have as much information as possible. James & Lisa Sherman attended a previous workshop and said "The real estate class that Lynn, Karen, and Linda taught was exceptionally helpful in getting my wife and I ready to buy a home. Their expertise and experience, in addition to their gregariousness, eased us into making the decision to finally buy our first home. Every step in the process was made clear and understandable with their guidance. I recommend their services to anyone looking for a home in Ventura County."

This is a free service to the community. The workshops will be held on the first Tuesday of the next three months at 711 Daily Drive, Suite 105, Camarillo, CA 93030.

February 1st, 6:30 PM
March 1st 6:30 PM
April 5th 6:30 PM

To reserve a seat contact Lynn Kenton @ 805-901-5444 or Linda Hall @ 805-208-8951