December 17th, 2009 6:14 PM by Lehel S.
Foreclosure backlog estimated at 1.7M
By ALAN ZIBEL AP Real Estate Writer
WASHINGTON (AP) -- About 1.7 million homeowners were on the verge of foreclosure in the fall, a looming "shadow inventory" of homes that will be put up for sale in the coming years and weigh down prices, a report said Thursday.
The number, up from 1.1 million a year earlier, is likely to keep rising through the middle of next year or later, said Mark Fleming, chief economist of First American CoreLogic, the real estate research firm that released the study.
Already, the foreclosure backlog is equal to nearly half the 3.8 million unsold new and existing homes currently on the market, First American said.
"We're going to be dealing with high levels of distressed (sales) in the marketplace for at least a couple of years," Fleming said. "It's not just all going to disappear."
Other reports have come up with larger estimates. But FirstAmerican assumes that fewer delinquent borrowers - only about one-third - will wind up losing their homes. It also estimates that nearly 30 percent of bank-owned properties have already been listed for sale.
In many markets around the country, the number of new foreclosures has dropped in recent months as homeowners are reviewed for loan modification programs. But real estate agents, who have seen this as an encouraging sign, still fear that an onslaught is coming.
"We've been in recovery mode for most of the year. How many foreclosures do they have to dump on the market to affect that? I don't know," Deborah Farmer, owner of StarLight Realty in Tampa, Fla. "Any house priced under $225,000 will be affected by a large increase in foreclosures in this market."