“Shadow Inventory”: 9.8 Million Homes On The Brink

So says Michael Olenick at Naked Capitalism.

It’s a “shadow” inventory because the lenders and servicers are engaged in a kind of intentional, self-imposed paralysis.  And it’s not leniency, but rather self-interest at work.  A loan isn’t in “default” until the creditor declares it, but the parties to the loan – the borrower and the lender – both know the score.

Of course, the paralysis affects both parties.  That’s a lot of people in limbo, unable to resolve the issue of whether they have a home or not, which is a big problem in and of itself.

H/T Steve Keen

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