Keep in mind, the backlog of unwanted homes could be a lot bigger than most people think. Way bigger. I was reading an article by Keith Jurow the other day, ("The Coming Mortgage Delinquency Disaster," Keith Jurow, dshort.com) that paints a pretty grim picture of what is really going on behind the faux inventory numbers. Jurow -- who has done extensive research on pre-foreclosure notice filings in New York state -- says: "The number of monthly foreclosure filings in Suffolk County on Long Island "(were) more than 180,000 (while) fewer than 1,000 foreclosure filings had been served each month in (the last four years). By this calculation, Jurow figures that there should have been 1,192,000 foreclosures in New York state while the actual percentage of homes that have been repossessed remains in the single digits. (Read the whole article here.)
Chew on that for a minute. So, that's a total of 180,000 homeowners who would have faced foreclosure under normal conditions, while less than 48,000 have actually been foreclosed. That's 132,000 fewer foreclosures than there should have been IN JUST ONE COUNTY IN ONE STATE ALONE."
The reason the prodigious shadow stockpile continues to balloon is quite simple, as Jurow points out in his piece:
"Servicers do not foreclose on seriously delinquent borrowers throughout the entire NYC metro area. Completed foreclosures have actually declined rather dramatically throughout the nation in the past two years. The difference is that in the NYC metro, the servicers have not been foreclosing since the spring of 2009."
So, there you have it; the banks haven't been foreclosing because it hasn't been in their interest to foreclose. Foreclosure sales push down prices which batters balance sheets and scares shareholders. Who wants that? So the game goes on. Only now, the dynamic is changing. Skittish investors are eyeing the exits, QE is winding down, and housing prices have peaked. The recovery has reached its zenith, which is why the bankers want get off on the top floor before the elevator begins its bumpy descent.
People who are thinking about buying a house in the near future, should watch developments in the market closely and proceed with extreme caution. No one wants to get burned in another bank swindle.