2020-08-15
REO Projections by John Czerw, President Of The REO Consultancy
REO Projections by John Czerw, President Of The REO Consultancy

REO Projections by John Czerw, President Of The REO Consultancy

 

I have found that most business situations can be understood by a handful of numbers.

Here are the ones to follow related to the REO Market. 

They show that a surge in REO is in the future due to the Coronavirus.

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The first number to watch - Seriously Delinquent Loans:
  • March,,,,, 554,000
  • Apri......., 547,000
  • May,,,,,,., 691.000
  • June..... ..748,000
  • July....... 1,738,000
An Increase of 320 % over 5 months
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The second number is Foreclosure Starts:
  • March...... 27,100
  • April........ 27.800
  • May......... .8,600
  • June..........4,400
  • July...........4,800

Delinquencies are soaring and foreclosure starts have plummeted by 84%.

This situation is creating a bubble of epic proportions.

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The third number is Foreclosure Completions:
  • March....... 15,000
  • April.......... 9,100
  • May.......... .2,800
  • June.......... 2,600
  • July............2,500

Let's call 15,000 Foreclosure Completions a normal monthly level.

There were 6,000 fewer in April. There were 12,000 fewer in May and June and July.

That's 3o,000 REOS stuck in the process after only five months. And that's not factoring in the increase in delinquencies.

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The final number is REO Sales:
  • March....... 15,100
  • April..........11,000
  • May.............8,300
  • June............7,600
  • July...........5,000
Simply put, the existing REO inventory is selling off and it is not being replenished at this time.
===============================================
Conclusion:
Assuming that the number of Foreclosure Completions remains at current levels for a year, a backlog of 144,000 REOs will be created during that period. If they remain low for 18 months, which I believe possible, the backlog could be 216,000. The backlog is being created. The Surge will come
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