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It’s much like tearing a band-aid off a wound. Do it slowly and it hurts much longer. Do it quickly and it hurts bad but the event is over quickly. It appears that banks while foreclosing are holding off on putting them back on the market. The term to describe this is shadow inventory.
While speaking with a trusted realtor last night at a business meeting she mentioned that inventory is tight in California. I was a bit taken back. Really, with so many homes being vacated there’s a lack of choices? So what’s really going on? Why aren’t there more homes on the market and just how much shadow inventory are banks holding onto? Will they trickle them out slowly over the next three years and will the result be stagnant home prices and minor depreciation before we see some stabilization?
The real problem is that banks are not sharing just how many foreclosed homes they have on the books. Then comes the question, how many borrowers who signed modifications under the HAMP of Home Affordable Modification Program, will stop making payments in the future when payments rise once again? Economists have differing views as the whether lenders should dump the inventory as it comes letting us take the pain now or slowly release it to prevent another shock to housing prices. Fitch Ratings projects it will take 40 months for the shadow inventory of foreclosed homes to work their way through the system. Fitch also noted that the majority of modified loans have re-defaulted within one year, further pushing back the final foreclosure dates. Many lenders blame the current inventory of foreclosed homes on the governments directive to work with borrowers on loan modifications, which often times only delays the inevitable foreclosure in the future. For us a reverse mortgage professionals we can tell our prospective borrowers that low interest rates and homes that will most likely not rebound in value for some time, that now is a great time to get a reverse mortgage.
The question to you are viewers is: Do you think the banks should release foreclosed homes back on the market more quickly or keep releasing them slowly over the next several years. Leave your text or video response in the comment section below.
Will they find you?
Have you ever looked at an online review before selecting a restaurant on a site like Yelp? Well today more seniors are going online to research products…including reverse mortgages. The question is will they find you and how are they looking. The renowned Pew Research Center says over 80 percent of seniors ages 55-73 use search engines to investigate products before purchasing. As a result reverse lenders are racing to establish a strong internet presence.
Don’t worry if you’re a small broker or individual loan officer as many have established their own search engine friendly sites with great success. In fact Reverse Fortunes MyRMAgent website system provides just such a solution. Besides product knowledge and an online calculator, what are consumers looking for? Reputation and feedback. Cliff Auerswald with All Reverse Mortgage Company says “Search engines like Google are now incorporating sites like Better Business Bureau Trustlink and Yelp into the search engine results page…” Many Americans have come to trust and rely upon Better Business Bureau ratings to determine if a company has a good reputation in dealing with customers. Sites like Yelp allow for unfiltered comments from customers sharing their experiences. One Reverse, a division of Quicken Loans, has made online feedback from borrowers easy by setting up their own online portal. Surprisingly they do not filter or review the comments yet find success with this open model. Consumers are wary if companies only post glowing reviews from their customers which may backfire, where a mix of critical and positive reviews boosts credibility. The best way to diffuse a problem is to address it yourself. In other words, don’t run from bad reviews. Christopher Foltz with communications strategy firm Christopher Foltz & Company said “The best thing you can do is address the negatives, and more importantly, be the first one to address it and draw attention to the negative things”. Beyond having a web presence it appears that customer reviews and company ratings are an integral part of not only attracting but reassuring visitors that you are a reverse mortgage lender to be trusted.