Winter Duplex Dam Sure To Cause Spring Flooding

You’ve probably heard some lenders have put a temporary stop to duplex foreclosures while they investigate and review the potentially fraudulent practice of robo-signing the paperwork.

And odds are, you think this a good thing.

I do too. Well, sort of.

While it’s important that banks obey the law and foreclose only on those who have legitimately defaulted, in the end, I think we’ll all find there are a lot more of those kinds of people than there was fraud.

And what happens come spring when those properties hit the market along with all the others?

According to Realty Trac’s Rick Sharga, “There are five million loans that are seriously delinquent right now and not yet in foreclosure. A large, large number of those will hit the foreclosure pipeline next year. So 2011 is probably going to be a little bit worse than 2010.”

That, of course, will probably result in far too much inventory on the market, adding even more downward pressure on prices.

In other words, if you’re considering selling, you might want to get out ahead of the flood.