Friday, April 04, 2008
Lenders who allow owners to stay in their homes are distorting the record foreclosure rate and delaying the worst of the housing decline, said Mark Zandi, chief economist at Moody's Economy.com, a unit of New York-based Moody's Corp. These borrowers will eventually push the number of delinquencies even higher and send more homes onto an already glutted market. "We don't have a sense of the magnitude of what's really going on because the whole process is being delayed,'' Zandi said in an interview. "Looking at the data, we see the problems, but they are probably measurably greater than we think.''
it was earlier this week point out by barry ritholtz that banks, when they do foreclose, are sometimes not even bothering to take title (incidentally highlighting again chicago as one of the nation's foreclosure capitals).
this matches up well with anecdotes and common sense. servicers in the most blighted areas must be beyond overwhelmed by now. there simply isn't enough manpower to process what is happening, and banks are not in a position to take on more REO. one would have to expect banks to price REO even more aggressively in coming months in an effort to get through the inventory.