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