Hat tip to Ken for sending in this article from Forbes:
An excerpt that suggests one reason why prices are going up:
In some cases banks are choosing to hold onto distressed assets longer, hoping to minimize losses on homes by artificially tamping down distressed inventory levels now. So when a home comes available in a foreclosure sale, the lender may choose to repossess it as a future REO than part with it during an auction.
In states like Arizona, that repossession is logged at the value of the mortgage — a “sales price” that may very well be higher than the actual market value of the property, according to Ingo Wizner, president of real estate research firm Local Market Monitor.
Around SD County, it appears that more borrowers have started making their payments. The number of SD filings has dropped off almost by half, Y-O-Y:
Last month had 69% fewer REOs, and 42% fewer 3rd-party sales, Y-O-Y:
Regardless whether the shortage of distressed properties is due to more borrowers now making their payments, increased legislature, or a deliberate shift in banking policy, the foreclosure spigot has slowed to a trickle.
So banks are holding on to more shadow inventory further reducing inventory and putting a upward push towards higher prices.
Regarding the $25B foreclosure settlement:
The misunderstanding came to light last week with settlement monitor Joseph A. Smith’s first report on servicer violations in which Smith said he wants servicers to halt dual tracking as soon as a borrower files initial paperwork for a loan modification.
Many believed that to be the case already, largely because state attorney generals had said publicly that the pact outlawed dual tracking. But the reality is that the five servicers—Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial—negotiated that they would only halt a foreclosure once a borrower had turned in a “complete” loan mod application, says Katherine Porter, a University of California-Irvine law professor who is monitoring the settlement for the state of California.
No one knows how many borrowers have ended up in foreclosure as a result of the continued use of dual tracking and the confusion sowed by regulators who have repeatedly claimed the process was banned. In judicial states, extensions and postponements of foreclosure have created massive clogs to the court system, imposing costly delays.