And the inventory of mortgages that are more than 90 days delinquent or somewhere in the foreclosure process amounts to more than five times the current stock of REO, illustrating the large “shadow inventory” of properties that might be put up for sale sometime in the future.
Concerns about future defaults and foreclosures have caused lenders to tighten their lending standards considerably – raising down-payment requirements, requiring extensive documentation, and charging substantial fees to all but those with the highest credit scores. This marked change in mortgage credit standards has restricted access to mortgage credit for many potential borrowers, limiting both home purchases and refinancing.