The first three months of 2010 featured a record number of foreclosures, even as many economic experts claim the recession is over.
RealtyTrac Inc. reported that the number of homes in the REO pipeline jumped 35 percent from the first quarter of 2009. More homes became REO properties than in any other quarter since at least January of 2005, when RealtyTrac first began reporting foreclosure figures. In all, more than 900,000 homes received foreclosure notices, or one in every 138 homes.
“We’re right now on pace to see more than 1 million bank repossessions this year,” said Rick Sharga, a RealtyTrac senior vice president.
The surge in foreclosures, according to many experts, has to do with banks finally processing the so-called REO homes “shadow inventory” that had yet to be officially foreclosed on and were in limbo.
Although the Obama administration is still trying to prevent foreclosures, many real estate experts believe this policy is actually harmful both to homeowners and the real estate market in general.
Ivy Zelman, who runs her own real estate consulting firm, says, “Public policy is delaying the pig in the python – the pig has lipstick.” The “pig,” to Zelman, represents the huge REO inventory that is just now being dealt with by the nation’s financial system – but still is not represented by official figures.
In Washington D.C., for instance, Zelman says official estimates say there is about a 5 month supply of homes for sale. But if the hidden REO properties were actually represented, it would be an over 13-month supply.
Another reason for people to try training on how to become an REO agent? It’s not just past foreclosures that are the problem – many future ones are still to come. Households facing foreclosure grew 16 percent in the first quarter of 2010 year-to-year and 7 percent from the last quarter of 2009.
Homeowners continue to struggle with mortgage payments because they’ve either lost their jobs or an interest-rate reset on their home loan has made it impossible to afford payments. In addition, most can’t refinance because they’re “underwater” – they now owe more on their loan than their home is worth, a problem that’s not going to go away soon with home prices still dropping in most areas. And the Obama Administration’s programs to help homeowners modify their loans has only had very limited success – about 215,000 have completed the program, but another 158,000 were unable to follow through with the lowered payments they negotiated with their banks.
Training to become an REO agent and learning how to get REO listings is still a hot career choice in a real estate market that will continue to be dominated by REO sales.
