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Foreclosure sales halt creates 'shadow'
3 banks stop foreclosure sales
Updated: Monday, 11 Oct 2010, 6:29 PM EDT
Published : Monday, 11 Oct 2010, 5:41 PM EDT
GRAND RAPIDS, Mich. (WOOD) - Realtors call it "shadow inventory," foreclosed homes whose sale has been suspended.
If banks suspend these sales, it puts off the day of reckoning when these homes have to go on the market. That could create a glut, which could push home prices down farther.
And now hundreds of home sales could be in jeopardy after several national banks announced the suspension of the sale of foreclosed homes.
But in West Michigan, so far so good.
Joe Loftis is a Coldwell Banker who sells homes for Bank of America, one of three banks suspending foreclosure sales . He has an offer on at least one of those homes, and even though it looks like the sale could go through, his client is nervous.
"There's nothing worse when clients are in for their mortgage application or they're getting funds from a bank and (they're) notified that the deal is off," he told 24 Hour News 8.
Along with Bank of America, JP Morgan Chase and GMAC Home Mortgage (a unit of Ally Financial) halted sales of foreclosed homes in all 50 states when faulty documents were showing up in court.
Most of the problems are in states where judges are involved in the process, but not Michigan. Loftis said he only runs into problems with short sales.
"When the bank owns the property, as in a foreclosure, I'm not running into any red tape at all."
According to RealtyTrac, there are more than 5,400 homes in foreclosure in Kent County. Loftis believes Bank of America owns one-third of them.
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