Shadow Inventory Of Troubled Mortgages, Standard and Poors, US housing prices, Mortgage crisis may be far from over, More delinquencies and lower home prices are to come

Shadow Inventory Of Troubled Mortgages

From Standard and Poors, February 16, 2010.

“The Shadow Inventory Of Troubled Mortgages Could Undo U.S. Housing Price Gains”

“In summer 2009, the seasonally adjusted S&P/Case-Shiller Home Price Index rose for the first time in virtually two years. Since May 2009, the index has risen by over 3%, suggesting that the necessary correction to U.S. residential home prices is nearing an end. However, in Standard & Poor’s Ratings Services’ view, the mortgage crisis may be far from over. The overhang of homes heading toward liquidation suggests more delinquencies and lower home prices are to come.
The current “shadow inventory” (including all delinquent loans, not only those that are real estate owned [REO]) of troubled mortgages will likely take about 33 months?or nearly three years?to clear at the current rate of liquidations. Moreover, we believe this estimate is conservative, as we do not assume any loans that have yet to show any serious signs of distress to date will default in the future and further increase the overhang of homes. Nonetheless, we believe that in reality additional loans will default in the near future due to the weak economic environment, distressed residential home values, and the resulting contraction in the supply of mortgage finance.
We believe that the recent reversal in housing prices is the result of a temporary constriction in the supply of foreclosed homes on the market. This temporary constriction ensued because servicers have completed fewer foreclosures due to court delays, servicing backlogs, and political pressure to keep borrowers in their homes. However, there is a rapidly growing shadow inventory of properties where borrowers are delinquent but foreclosure has not been completed. Overall, it is our opinion that recent positive housing reports should not be construed as a sign that the distress in the residential housing market is abating, but rather should be attributed to the temporarily limited supply of homes on the market.”

“A Swelling Number Of Distressed Loans Creates The Shadow Inventory
The monthly balance of distressed loans currently outstanding relative to the monthly balance of those that pay off, or close, suggests that there is a growing shadow inventory of loans that need to undergo the closure process. In January 2005, the balance of distressed loans outstanding was about 18x that of distressed loans that closed. Today, the balance of outstanding to closed distressed loans has increased to about 31x (see chart 2).”

Chart 2

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18 responses to “Shadow Inventory Of Troubled Mortgages, Standard and Poors, US housing prices, Mortgage crisis may be far from over, More delinquencies and lower home prices are to come

  1. No accountability period,thats what happened. Slush funds!!!!!!!

  2. Phil from Tennessee left me the below message at AGJ concerning Dr. Manning…..

    @Jacqlyn, yes, Dr. Manning has received several death threats as I listened to his show and was worried about him, so I called him up…Please everyone, pray for his safety, but, have you all never seen his big boy bodyguards in any of his filming, I have, and I would not want to try to go after Dr. Manning, lol…They are monsters and go with Dr. Manning everywhere…

  3. Jacqlyn Smith @ 3:15 pm
    Thank you for the info re: Pastor Mannings body guards. I really like that gutsy guy, with his sweet little cherubic face. To me he really has an angelic countenance. He is 100 times better speaker than Obama, and much better educated too. I think Pastor Manning attended all of his classes and did all of his own homework and it shows, sometimes he reminds me of the Rev. Martin Luther King Jr. who was also a great speaker.

  4. Last May, Forbes named Fernley, NV as one of the worst foreclosure-ridden towns in America. It’s worse now.

  5. Only a couple days ago we heard:

    Obama: Stimulus ‘worked as intended’

    Biden on Stimulus: ‘Never Thought It Would Work This Well’

    Today we hear:

    Jobless Claims, Inflation Jump as Economy Wobbles
    Jobless, price data fan concerns on economy

    “Say it an”t so, Joe!!!”

  6. What the experts [?] are saying…

    Richard Bernstein, Michael Farrell, Caroline Sayan Provide ‘Sense on Cents’

    Posted by Larry Doyle on February 18, 2010 7:09 AM |

  7. Is this the beginning… many more out there like this guy????

    ‘The inquisition is still alive and well today’
    Text of denunciation of American tax system by alleged pilot in Texas crash

  8. Might the Hunter Become the Hunted? Judge Jed Rakoff, Mary Schapiro, and Rule 14a-9

    Posted by Larry Doyle on February 18, 2010 8:51 AM |

  9. I remember when I was a young teenager and I would hear about Dr. Martin Luther King and what I so admired about him was his “I have a Dream” and his strength to protest but to keep it with no violence. It is sad that Jackson and Sharpton chose to be blood sucking money hungry morons to lead our black community. I wish I could had met him! To this day I can hear those wonderful words from him…..”I have a dream.” Dr. King you would be proud today! Well almost! If he were still alive there would not be the hate taught at black churches as there is at Trinnety!

  10. CW-Word Press must have shut down for an hour or so, I couldn’t get into Hillbuzz either.

  11. I had trouble getting to CW too. It was like a denial of service for a while about 20 minutes ago.

  12. Let us all keep Rev. Manning in our prayers. God Love Him.

  13. Interesting that CNN is trying to call the pilot who crashed today into a federal building a domestic terrorist right away. He might be, but then why the delay in calling Hasan a terrorist when he was a real terrorist talking to terrorists inside Yemen?

  14. WordPress was bogged down earlier.

  15. Reason why obama hasnt release his docs.

  16. They won’t call Muslim Jihadi Terrorists Terrorists.

    Was Mr Stack a Freedom Fighter?

  17. *************** NEW THREAD *************

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