S&P: Shadow inventory to grow

Loan mod candidates drying up, redefaulting

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Lenders are likely to add at least 1.75 million homes to their real estate owned (REO) property rolls that will take nearly three years to sell and put pressure on home prices, according to a new report from Standard & Poor’s Financial Services LLC.

Loan servicers appear to have "exhausted the supply of plausible candidates for loan modifications and switched their emphasis" back to foreclosure, the report said.

The high redefault rate on loan modifications will also add to the "shadow inventory" problem, analysts at Standard & Poor’s said.