Thread: Action Alert: Banks' Shadow Inventory of Foreclosed Homes

Banks' Shadow Inventory of Foreclosed Homes
Carolyn Said, Chronicle Staff Writer
Wednesday, April 8, 2009

[Ed.: US Government off-balance stimulus: order Gov Lending institutions and
banks to halt foreclosures for 6 months, then, foreclose, hold properties from resale
market to artificially affect home sales.]


A vast "shadow inventory" of foreclosed homes that banks are holding off the
market could wreak havoc with the already battered real estate sector.

Lenders nationwide are sitting on hundreds of thousands of foreclosed
homes that they have not resold or listed for sale, according to numerous
data sources. And foreclosures, which banks unload at fire-sale prices, are
a major factor driving home values down.

"We believe there are in the neighborhood of 600,000 properties nationwide
that banks have repossessed but not put on the market," said Rick Sharga,
vice president of RealtyTrac, which compiles nationwide statistics on
foreclosures. "California probably represents 80,000 of those homes. It

could be disastrous if the banks suddenly flooded the market with those
distressed properties. You'd have further depreciation and carnage."

In a recent study, RealtyTrac compared its database of bank-repossessed homes
to MLS listings of for-sale homes in four states, including California. It found a
significant disparity - only 30 percent of the foreclosures were listed for sale in
the Multiple Listing Service. The remainder is known in the industry as "shadow
inventory."





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