In spite of the huge number of foreclosed homes that have been sold by the banks in the Las Vegas area, the volume of new foreclosure actions continues to rise.
While many of these defaulted properties throughout the nation will escape foreclosure by means of a short sale, the rest will move on to foreclosure proceedings and eventual trustee sale to a third party or repossession by the lender.
Overwhelmed by the number of defaulted properties, banks have stretched out the time between the beginning of mortgage delinquency and formal foreclosure to an incredible average of 469 days - more than 15 months. Since these homeowners in default are living in their house without making mortgage payments, that is a way to build up a sizeable pile of cash.
Delinquent Homeowners - The Number Just Keeps Growing
You could argue that the shadow inventory is the total of repossessed homes not yet on the market and defaulted homes that will move into foreclosure. However, there is also the matter of homes which are seriously delinquent in mortgage payments. Why? you may ask. The homeowner can cure the delinquency by paying the arrears before the home goes into default.
The problem is that the cure rate for these seriously delinquent mortgages is almost zero. Let's take a look at the following chart.
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