Why Carrington lost its appetite for REOs

The days when REO properties traded for 20 to 30 cents on the dollar are long gone, and investors are “basically paying retail, multiple-listing prices,” Carrington Investment Services Managing Direct Christopher Whalen tells American Banker in a piece exploring Carrington’s decision to “throw in the towel” on the REO-to-rental game in May.

It’s a game of supply and demand — the once-feared tidal wave of “shadow inventory” seems to have largely been slurped up by thirsty investors. REO inventory is down significantly, thanks to falling delinquencies and foreclosures, and the increasing willingness of lenders to engage in short sales, American Banker reports.

Loan data aggregator CoreLogic reported this month that shadow inventory dropped below 2 million properties in April, down 34 percent from a 2010 peak of more than 3 million homes. Source: americanbanker.com.