[quote=AN]analyst, if that is true, then why would any bank release any REO at all? Wouldn’t it make sense for them to keep them all in shadow?[/quote]

The choice whether to sell fast or wait reflects the owner’s prediction about the direction of house prices in the future, and how far and how fast they will move. Different decision-makers predict different future values, and take different actions.

The important point is that the choice only exists because of federal government intervention. If mark-to-market were rigorously enforced, the asset and equity markdowns would be mandatory, and all the big players would be declared insolvent and liquidated, instead of being allowed to stick around and make market-distorting decisions.