The Federal Reserve realizes that the U. S. economic recovery is not likely to strengthen appreciably until residential construction recovers. The recent agreement between state attorney generals and major U.S. banks to resolve disputes regarding the handling of housing foreclosures is a plus. Now progress can be made in dealing with the shadow inventory of housing that is in default or mortgages that remain unpaid. In communities with a high number of shadow inventory homes, it is very difficult to get the housing construction sector started again because buyers fear that home prices will go down when the shadow inventory is put on the market.
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