Shadow Inventory Threat to Housing Recovery Recedes

Shadow inventory—or pre-foreclosures—have dropped by more than a third since August of last year, Lenders Processing Services reports in the “first look” data from its August Mortgage Monitor. Shadow inventories have now fallen to its lowest point in four-and-a-half years, and Florida leads the way with a 24.1% reduction year-over-year, although the state still has 16% of non-current loans.

Shadow inventory was once deemed a big threat to derailing the housing recovery, but that threat has been vanishing. The shadow inventory now represents 2.66 percent of all homes with a mortgage in the country, compared to 4.04 percent a year ago. 

The current rate of mortgages that are 30 days or more delinquent but are not yet in foreclosure was at 6.20 percent in August, a decline of nearly 10 percent since August 2012, LPS reports.

Source: Lender Processing Services and “One-third of Shadow Inventory Cleared in Last Year,” Mortgage News Daily (Sept. 26, 2013)