Wave of foreclosures coming to market?

Question

One of my contractors does a lot of property preservation and make ready work for a HUD and B of A contractor. He said that he is slammed with work orders lately and that his contractor is getting a 100 new work orders per day, all for different properties. I asked what is a normal number, and he said 20 new ones a day is a lot. These are coming from B of A. He said they were all north Texas properties.

Anyone else seeing this in other areas? Does B of A think the market is finally ready to absorb these? Or is there institutional demand for SFRs, like we are hearing about in CA? Other theories?

Anyone else seeing this in other areas?  Does B of A think the market is finally ready to absorb  these?  Or is there institutional demand for SFRs, like we are hearing about in CA?   Other theories?

Brian H. · Answer

Jon Klaus - I have heard the same thing as your contractor. Up until 2 weeks ago, my firm was a B of A prime contractor for property preservation and maintenance. We no longer work directly for B of A as they just sold their field services division to Safeguard Properties. This is another reason that you're seeing more B of A properties moving due to the fact that this transition created a bit of a back log. Going forward, Safeguard properties will be handling all the field services work on B of A pre and post foreclosure properties and, the properties cannot convey to HUD/FNMA/FDMC without first being in the proper conveyance condition. Our firm is also a Prime contractor for HUD, who just this week told us to expect an increase in volumes qtr 1&2 and they referenced B of A specifically as one of the causes for the increase.

Scott W. · Answer

the shadow inventory is mostly for the judicial states. the AZ's of the world have already been thru their wave.

Rob K. · Answer

I've been hearing about this wave of foreclosures for a couple of years now. Maybe it's finally here. I have a pile-o-cash waiting for some deals.

The HUD site for my county usually has 1.5 to 2.5 pages of houses for investors. Today, there was less than one page. I remember in 2009-2010, there were 5-6 pages.

Aaron Mazzrillo · Answer

I'm pretty sure I recently read that November had the highest foreclosure rate in the last 9 months. Sounds like something happened that finally is allowing banks to take action. I can't imagine they are going to flood the market with inventory though. That would only hurt them. As far as "shadow inventory" goes, I've been hearing that catch phrase for 5 years now. I think you'll have a better chance of seeing a snipe than shadow inventory house.

Corey Dutton · Answer

I agree with your comment Gene Hacker, so many people waiting on the sidelines for so long, in many markets was like a 'bum rush'.

Gene Hacker · Answer

I think there was shadow inventory but it was balanced out by shadow demand.

Lots of money was waiting on the sidelines for the bottom from investors.  Then you have the young buyers that were priced out in the bubble, then watching prices free-fall decided to wait it out.  These two groups are making their moves.  In many areas, the demand is simply greater than the supply (traditional and shadow).

Mark Berry · Answer

Scott W. TX is non- judicial so maybe there are more coming.....

Marc Bodinger · Answer

That's what I was referring to Joel Owens but the question is how many properties are involved with this new wave potentially hitting the market across the country? I think the settlement because the banks and states was $25B.

Joel Owens · Answer

I had read somewhere that a bunch of these properties were from the ROBO fiasco and these banks had finally reached settlements with the Government as well as many individuals paving the way to dispose of these properties.

Also could be that deposits and also new loan volume at that bank have reached a point where they can release a bigger quantity of properties and absorb the losses.

Marc Bodinger · Answer

It would be an interesting development Rob K, piles of cash facing a new wave of foreclosures. The banks would love to get the properties in question off their books quickly.

Wave of foreclosures coming to market?

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