Changing default and liquidation rates in various regions prompted Standard & Poor’s Ratings Services to reduce its projection of how many months it will take to clear the nation’s shadow inventory. After reviewing third quarter default and liquidation rates, the agency noted signs of improvement. S&P estimates it will take 45 months to clear the excess stock. However, with constant changes to the foreclosure process, the number appears ever-shifting. Three months ago, for example, S&P said it would take 47 months to clear the shadow inventory, those properties not yet on market, but facing eventual resale. Diane Westerback, managing director of Standard & Poor’s Global Surveillance Analytics, noted the volume of distressed non-agency residential mortgages remained high at $384 billion in quarter three, but has declined somewhat each quarter since mid-2010. “We believe this points to a continued drop in the amount of time it will take to clear this ‘shadow inventory’ over the next year assuming national liquidation rates do not decline abruptly,” Westerback said. Still, industry professionals expect to see shadow inventory in the market for at least the next few years. Rick Sharga, executive vice president at Carrington Mortgage Holdings, recently told HousingWire that the raw data is not telling the whole story. He noted there has not been one quarter since 2005 where the market sold more REOs than the lenders took in. Write to Kerri Panchuk.