REO

In January, the number of homes still hidden in the shadows fell to 2.2 million, a 28 percent decrease from the January 2010 peak when an estimated three million housing units were in shadow inventory, data from CoreLogic revealed. The 2.2 million units represent a supply of nine months and a year-over-year decline of 18 percent from January 2012, CoreLogic reported. Seriously delinquent loans were the main drivers of shadow inventory, accounting for one million of the distressed properties yet to be released.

California saw a month-over-month increase in pending home sales in February, while distressed were down for both REOs and short sales, the California Association of Realtors (C.A.R.) reported. C.A.R.'s Pending Home Sales Index (PHSI) was up 8.7 percent to 110.2 in February, up from a revised 101.4 in January. The index is based on signed contracts. Overall, distressed property sales accounted for 32.9 percent of sales in February, a decrease from 35.6 percent in January and a steep decline from 53.3 percent a year ago.

Existing-home sales rose 0.8 percent in February to a seasonally adjusted annual rate of 4.98 million, the National Association of Realtors reported Thursday. Economists had expected the sales pace to climb to 5.01 million from January's originally reported 4.92 million. January sales were revised up to 4.94 million. The inventory of homes for sale rose for the first time since last July, up 9.6 percent to 1,940,000. At the reported sales pace, that represents a 4.7-month supply of homes for sale, up from the 4.3-month supply reported for January.

The time properties stay in distress before going to sale has increased nearly five fold since 2003 in non-judicial states, according to CoreLogic's March MarketPulse report. The data provider tracked months in distress from 2003 to 2012 and found the disposition timeline in both judicial and non-judicial states has seen a significant extension. In judicial states, the disposition timelines remained relatively constant at seven months but began to rise in mid-2008 before increasing to an average of 35 months. In non-judicial states, it takes about 24 months before a distressed property goes to sale.

REO inventory declined at an accelerated pace in 2012 as investor activity intensified, but the impact of the reduction has been uneven across markets, according to an analysis from CoreLogic. In the data provider's March MarketPulse report, economist Sam Khater explained markets in the Midwest and Northeast are still struggling with REO inventory, while the South and Southwest are seeing ""massive"" declines. The decline suggests an increase in investment activity from both individual and institutional investors, with different contributions from the investor types.

A longtime provider of mortgage industry outreach services announced it is closing its doors for good. Titanium Solutions, founded in 1999 and based in South Carolina since 2008, said its services aren't as in-demand as they once were with the market now in recovery. In a statement sent to its vendors, the company said the use of face-to-face outreach has experienced a ""precipitous decline,"" attributable to ""improving mortgage delinquency rates, declining foreclosures, and improved servicer processes."" All outstanding work assignments are being returned to clients.

Foreclosures are declining in most of the Western states tracked by ForeclosureRadar, but some experienced anomalous upticks in February. For example, in California notices of default and notices of trustee sale together increased 10 percent--a sharp about-face from the previous month's 43.3 percent decline. ForeclosureRadar anticipates a return to the recent trend of declining foreclosure activity in the state. While positive for homeowners, ForeclosureRadar points out an unintended consequence of such market conditions: decreased REO inventory, which is ""still very much a part of the California real estate landscape,"" the firm said.

Foreclosure starts in February showed some pick-up in activity month-over-month, while REOs fell to their lowest level since September 2007, according to RealtyTrac’s foreclosure market report for February. RealtyTrac reported a 10 percent increase in foreclosure starts from January after three straight months of declines. Year-over-year, foreclosure starts were still down 25 percent. Bank repossessions, or REOs, hit a 65-month low in February, according to RealtyTrac, and were 11 percent lower from the previous month and down 29 percent from February 2012.

The evidence is clear that the recovery in housing is finally under way, but the question that remains open is whether the positive trends in housing are sustainable, Federal Reserve Board Governor Elizabeth A. Duke said in a speech at the Mortgage Bankers Association's Mid-Winter Housing Finance Conference. In her view, the recovery does appear to be sustainable. ""I do not believe that a flood of houses on the market from households that are currently underwater or from bank REO is likely to materialize or to be sufficient to outpace growing demand,"" she said.

After assessing over 900 markets across the country, RealtyTrac put together a list of the top 15 markets for short sale and REO purchases for the year. Out of the 15 markets selected for short sales, nine were located in California. RealtyTrac also noted the average remaining deficiency after a short sale exceeded $100,000 in seven of the 15 markets, which suggests banks are willing to take a huge loss to avoid foreclosure. The markets on the REO list averaged discounts ranging from 33 to 57 percent and the time to sell ranged from 139 to 175 days compared to 188 to 358 days for short sales.