Why does The Shadow Inventory Grow
There are 2 reasons I have heard recently that explain why there are foreclosed properties that have not yet hit the market for sale. Some of the foreclosures I have been following were foreclosed on months ago by the lenders.
First let me tell you I am not a banker and I have no source of inside information. These reasons are what I have "heard."
1. Lenders and Fannie and Freddie are making sure all their paperwork is in order to be sure they know who has the right to sell the property.
2. The Fed allows a bank to borrow 3 1/2 times the troubled asset value at very low interest rates.
The numbers of foreclosures appear to be less than last year but those that are now REO do not get to the market as quickly IMHO.
Any thoughts as to the validity of these reasons and do you know of any other reasons why the shadow inventory grows or why there are foreclosed properties that are not yet on the market?