Countrywide REO Inventories Shooting Up
Countrywides REO inventory is quickly skyrocketing. Their total inventory is $2.7 billion and California makes up $1.1 billion of the total (if you want to make an all cash offer for the entire portfolio, I am sure they would be willing to take a bit of a discount)![googmonify]4494413162:right:250:250[/googmonify]
What I find interesting is that the start of the graph is January 27, and they had approximately 5,000 houses. Ten months later they have over 13,000. Any guesses about where the chart will be at the end of next year? Countrywide is so big that they can probably serve as a pretty fair proxy for the entire industry and the growth in REO’s that they are experiencing.
The lenders are going to have to get realistic in their pricing soon or they will be holding onto a huge inventory that will swamp their balance sheets. They are trying to walk a fine line between recovering as much money as they can for their shareholders, not causing additional market price declines by dumping properties and keeping their non-performing assets to a minimum.
The smaller lenders are going to have to start cutting loose and getting rid of properties. I am sure that Bruce Norris will give us some keen insights into this process next Tuesday. He has substantial experience in purchasing both individual and packages of REOs in previous downturns. I am really looking forward to getting at his charts and graphs to determine the trends for the areas I am working. They are incredibly helpful in my negotiations and determination of the price when I am ready to exit.