I’m having trouble getting my head around the build-up of REO properties. The longer banks hold these properties in this market, the more they’ll eventually lose on the sale, right? On the flip side, if they dump every REO into the market as they come in, the flood will push the market down faster. So they lose either way. What I can’t see is where the breaking point is where the banks have so much REO property in a declining market that they have little choice but to dump it all and realize the loss.
Other than not wanting to flood the market all at once, what factors keep banks from wanting to offload REO properties?
