Now that we understand what Shadow Inventory is and how the Robo Signing fiasco created a backlog of distressed homes waiting to be released on the Pasadena real estate market, let's take a look at what role the National Mortgage Settlement plays in all of this.

National Mortgage Settlement

For full details on the $25 Billion settlement visit  But, basically, it does four things:

  1. It sets aside some money between $1,500 to $2,000 to folks that were foreclosed on where the paperwork was not filled out correctly by the banks.
  2. It sets money aside for the people that are underwater and not making their payments so that they can get a principal reduction on the house to help them hold on to their home.
  3. Homeowners that are making their payments on time, but are underwater may be allowed to refinance to make it easier on them to make their home mortgage payments.  AND...
  4. Most importantly, the settlement gave guidance to the banks on how they can proceed forward legally without penalty on the foreclosures that are currently in the pipeline.

Impact of National Mortgage Settlement

Here's what some experts around the country say:

“It does appear the number of completed foreclosures will increase following this settlement - especially in some judicial states with large backlogs - so there will probably be more REOs (lender Real Estate Owned) for sale.”    - Calculated Risk


“The settlement sets forth clear guidelines for lenders and servicers to follow when foreclosing, which should allow them to push through some of the delayed foreclosures from last year.”   - Brandon Moore, chief executive of RealtyTrac


And, Mark Vitner, a senior economist at Wells Fargo Securities, one of the biggest players says:

“The settlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled. Many lenders have refrained from foreclosing on homes as they awaited the settlement.”

So how will this impact Pasadena home prices? We now know that banks have a "road map" on how to proceed with foreclosures in and around Pasadena California.  This means that we'll be seeing more inventory hitting our Pasadena real estate market.  Come back tomorrow for Part 3 of our series - "How will Shadow Inventory Affect Your Home Price?"

Read More:  Pasadena Real Estate Guide - Everything You need to Know about Buying or Selling Your Home

Irina Netchaev is a Top Realtor and the founder and President of Pasadena Views Real Estate Team™. She is available to assist you in all of your Real Estate transactions. Email or call her today at (626)629-8439.


Interested in more information about Greater Pasadena Area cities, check out our City Guides below:

Alhambra City Guide

Altadena City Guide

Arcadia City Guide

Eagle Rock City Guide

Monterey Hills City Guide

Pasadena City Guide

San Gabriel City Guide

San Marino City Guide

Sierra Madre City Guide

South Pasadena City Guide

And, if you are interested in fun activities to do, take a look at our 365 Things To Do In Pasadena® page.

Thinking of selling your home? Interested in finding out the current market value of your single family home, condo or investment property? Then call Irina Netchaev at (626) 629-8439 to discuss what is happening in today’s Southern California Real Estate Market.