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Thursday, February 3, 2011

One Very Important fact for my fellow investors in regards to plentiful inventory, and a quick heads up for the realtor / brokerage firms that think we do not know what has been going on!

Two things!

#1 What Investors should know about Inventory currently out there.
#2 What Realtor and Broker groups should know about the rest of us "that including the government" catching on to what you have been doing...

So onto this week's information:

#1 Only 30% of foreclosures on market

RealtyTrac Senior Vice President Rick Sharga said major banks currently hold roughly 1 million REO, or homes repossessed through foreclosure, but only 30% have actually made it onto the market. According to its year-end report, foreclosure filings reached a new high in 2010 and should climb even higher this year, possibly surpassing 4 million filings. And that's not counting the more than 5 million delinquent loans that have yet to enter the initial stages of the foreclosure process, Sharga said.

The major kink in the housing market's recovery, and for the macro economy overall, is the work left to be done on homes currently in the foreclosure process, those about to enter it and the amount of repossessed homes the banks must shed. Striking a proper balance on how to manage this shadow inventory of foreclosures is vital for the banks to show a healthy balance sheet while not dumping too many distressed properties onto the market, further dragging down home prices and values.

A recent study from Morgan Stanley showed the shadow inventory, those properties facing imminent default, evolving from mostly subprime and Alt-A loans to containing more prime loans as elevated unemployment levels have pushed more homeowners behind on their mortgage. Analysts said that some 8 million repossessions would need to be liquidated over the next five years before the market stabilizes. Adding to the problem are recent issues the banks are having processing the paperwork. In October, the banks had to hold up foreclosures to refile affidavits signed improperly in many states, pushing more than 250,000 foreclosure cases into 2011.

Reports recently showed that the problem may have spread to the notices of default as well. And in the 23 states where lenders must foreclose on a homeowner through the court system, backlogs of cases have formed month-long delays.

This just reinforces the business model I follow, and should encourage more to act!

#2 FBI "Bid Rigging / REO Realtor Failures To Submit Offers" Investigations Stir Up San Fran.. and are gearing up for nationwide

The recent FBI investigations into California bid rigging taking place at courthouse auctions and accusations that REO Realtors are not submitting investor offers to banks in California are having repercussions throughout the United States. Investors and bird dogs alike desire up-to-date information related to the ongoing investigations with specific data on how to identify or avoid potential problems when Buying at Auction or dealing with Bank REO Realtors.

Bid Rigging Explained

For those that haven't yet heard the news, the FBI is investigating real estate speculators and Real Estate REO Agents that have been "rigging bids" in the San Francisco Bay Area and elsewhere throughout the nation. Bid rigging is considered a federal violation of the Sherman Antitrust Act and subject to 10 years in prison and up to $1 million dollar fine if convicted. The current investigation has come about due to claims that small groups of industry insiders are collaborating to fix prices by refusing to bid against one another. The case was supported by a probe into the affairs of a Stockton real estate agent that plead guilty to bid rigging last April; since that time the FBI has expanded their probe and is now issuing nationwide alerts while encouraging anyone with knowledge about anti-competitive practices at foreclosure auctions / or when submitting offers on individual properties to call their published tip line.

Bottom Line?

Bird dogs and investors must understand the proper way to compete at court house auctions...And also there rights when submitting offers to REO Real Estate Agents.

Just ask yourself as a investor how many times you have placed a bid on a property "only to hear that it was rejected" to find out six months later it is either still for sale / or sold for less.

If you are submitting offers but are not receiving a letter of refusal direct from the bank on "Letterhead", there is a good possibility your offer was not submitted or the agent is allowing you to find great properties and then the agent places bids for his/her investment group.

Do not allow this practice to continue.

Know your rights and start making complaints direct to the FBI

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