There has been much written on the recently negotiated National Mortgage Settlement. Most of the reporting has revolved around the $25 billion that will be issued to consumers and states that have been impacted by the robo-signing scandal of 2010. We want to talk about a different issue addressed by the settlement.
Foreclosures have been slowed to a snail’s pace since the third quarter of 2010. Banks were concerned about the penalties that would be imposed by the settlement and decided to delay the actual seizure of foreclosed properties until the settlement was reached. This group of properties is known as the ‘shadow inventory’ which is currently hanging over the market.