ocerenter noted two posts ago – could the foreclosure crisis be turning a corner?

I join in his skepticism, due to the numerous ways the data can be manipulated – primarily, we’ll never know how many defaulters are not being foreclosed.  The bankers can just let people live for free if they want, and the public won’t know.

In San Diego County, there are more REOs and short-sale closings, than properties being foreclosed (based on MLS vs foreclosureradar stats):

Time Period REO + SS = REO & SS Totals Trustee sales Diff
2010 7,372 6,332
1H11 3,844 3,250
2Q11 1,999 1,710
June 672 570

If anything, the liquidation flow indicates that the bankers have become better at managing the pipeline – as long as they keep it around 1,000 properties per month. At least they are providing some inventory!

But what about the shadow inventory? Will the underwater folks provide an unmanageable event for servicers in the future? Not as long as selling about 1,000 properties per month is acceptable to the bankers and investors. Defaulters will just have to wait in line!

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