Wouldn’t it make sense for banks to be unloading REOs when all we see are bidding wars everywhere?
Initially we thought that the drop-off in foreclosures was because banks were pushing people to short sale instead. With this being the last year of debt-tax exemptions, wouldn’t we be seeing a surge of new short-sale listings?
Nope, instead it appears that they have shut down the foreclosure machine:
San Diego County New Listings between Jan 1 and Feb 28:
|Year||SS Listings||REO Listings|
Defaulting homeowners are going to squat as long as possible because they really don’t want to move – besides, rents are high and their credit is shot.
For short sales to occur, banks have to threaten to foreclose in order to keep the pressure on, otherwise defaulters will just keeping living for free.
But both short-sales and REO listings have plummeted.
Pollyanna thinks that people are making their payments again, or that the foreclosure settlement caused enough loan-mods that the problems are solved. No way. Filings are down, and cancellations are up because that has become policy now.