[quote=SD Realtor]Well CV, I am not sure that foreclosing quickly part is or ever was part of the plan. If institutionalized foreclosures would have happened en masse then those institutions would not have been able to manipulate the books as easily as if the assets were simply not performing. Once that foreclosure is done then financially it is a different ballgame.

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I was only referring here to the loan servicers. That’s where they make their money, collect all their fees, with a completed foreclosure. So their business interest is often at odds with their investors. They often have no skin in the game so maximizing return is sometimes incidental. But they are ill equipped to deal with distressed assets, whether it’s a delinquent loan or REO.

I think the whole “manipulate the books” thing is overblown. To the extent the loans are owned by private label MBS, they have no incentive, none at all. Banks that are subject to FDIC, Treasury, OTS and SEC regulation and supervision? They have incentive, but given the scrutiny they’re under, and the market for the last few years, it would seem unlikely there’s widespread continued manipulation. They were mostly pretty conservative in setting aside loan loss reserves a couple years ago in order to get bad business behind them. Are the GSE’s hiding losses? Maybe. Eh…probably. How much is anyone’s guess, but they make up maybe a 1/3 of the outstanding mortgage market.

As to who forecloses…well it is the servicer. They get the ball rolling, nobody else. The servicers, on behalf of the beneficiary control that process.