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Earlier this week Oregon received another $50 million in federal foreclosure prevention money because the state is one of 17 that have an unemployment rate higher than the national average. This brings the total amount of federal money received by Oregon for foreclosure prevention to $138 million.

While public foreclosure dollars can be just what a homeowner needs to get over the hump and keep his home, I have doubts that this is helping the problem as much as it’s delaying it.

I wrote a story in early June about shadow inventory in Portland. Basically, shadow inventory is any home that hasn’t been foreclosed on yet, or is stuck in the process, but will inevitably be foreclosed on. Although people try, there is no real way to quantify this number because it would be based on things happening in the future. Regardless, bankers and agents believe it exists. And it does.

Even if you look at the most recent data by , Oregon’s foreclosures continue to rise, while the number of notices of defaults has trimmed down. This shows that there is a supply of homes in that process that have yet to make it to the market.

Shadow inventory strikes fear in the hearts of agents who believe that eventually the homes will be released all at once causing home prices to fall off a cliff. But other than that, it’s just something that’s there.

My point is that this foreclosure prevention money is adding to the shadow inventory.

While the success of the money won’t be known for a long time, if it doesn’t work, we’ve (tax payers) spent a ton of money, and really, just extended the length of the current housing crisis.