Industry NewsMarkets & Economy

Skeptics don’t expect REO flood

Part 2: Sizing up the 'shadow inventory'
Published on Apr 19, 2010

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While there's mounting evidence that an economic recovery is under way and picking up steam, there's still no escaping the reality that roughly 7 million U.S. homeowners are either behind on their mortgages or in the foreclosure process.

If you consider nearly all of those homes to be "shadow inventory" -- as analysts who track the performance of mortgage-backed securities did in one report last year -- it's difficult to imagine that there's not more turmoil ahead in some housing markets.

But estimates of the size of the shadow inventory overhang vary widely, ranging from as few as 770,000 homes to nearly 7 million.

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