Shadow Inventory – When Will It See Light?
Did you realize that according to USA Today there are approximately 1.6 MILLION homes in the nation’s shadow inventory? These are foreclosed or bank owned properties that are sitting vacant and sitting on the books of the nation’s banks but have not been listed for sale. Many banks think that it is better to wait until home prices are stronger before releasing these homes for sale in hopes of recapturing some of their losses. Standard and Poor’s estimates the shadow inventory at about $405 BILLION.
While watching 60 Minutes Sunday night, my heart ached for the people in Cuyahoga County, Ohio where the City is demolishing thousands of vacant abandoned homes. The banks foreclosed on the homes but refused to take on the responsibility of preparing the homes for sale and vandals had destroyed the homes such that they are being demolished. It is such a sad state of affairs. The remaining neighbors are watching their values plummet daily.
I don’t understand why the banks are so eager to foreclose. If they would make it easier for folks to modify their current mortgages, so much of this devastation could be avoided. Instead, they make it nearly impossible for most homeowners to get the assistance they so desperately need. If someone high enough on the food chain at one of the mortgage banks could somehow cultivate an original thought that wasn’t verbatim out of the policy manual and realize that they could actually make a difference in our world, it would be a miracle.
My suggestion is that the banks call the homeowner when they see that they are having trouble making their mortgage payments. Not a collection call, but an assistance call. Just think if the banks reached out to the struggling masses and offered to assist them with a loan modification so that they could stay in their home that they worked so hard to purchase in the first place. Certainly someone at these financial institutions could figure out that a loan modification is so much better for everyone than another property to put on the shelf in the Shadow Inventory closet.