Metamorphosis Consulting, Inc.

Management Consulting Firm

Bank Foreclosure Funnel

by

BANK FORECLOSURE FUNNEL 

3-10-11

 

The funnel above shows the difficult situation for banks. They have an overabundance of delinquent homeowners, Lis Pendens that have been filed, and REO properties they are holding.

So, why don’t they step up each phase of the foreclosure process and wipe out the bad debt?  Because dumping all of this inventory on the market at one time would cause prices to plummet and decimate the housing market.

Like the funnel above, their strategy instead has been to back up every phase of the foreclosure process and “Drip Release” their inventory into the housing market. In many cases, banks have had to:

  • Only gradually release REO properties into the market through listings.
  • Slow down the legal process of foreclosure after Lis Pendens have been filed.
  • Delay taking action against delinquent homeowners.