It’s not mass collusion — it’s just that putting all of those foreclosures on the market would be financial suicide for them. They know that if the market is flooded with foreclosures, that will push home prices down which will in turn devalue all of their mortgage “assets” which will then mean that they’ve got a lot less money than they think they do. It’s a bad situation.
My guess is that they are waiting to get bailed out; they will battle to see who can become the biggest before they eventually implode because they will all want to be “too big to fail”. When they get bailed out for their losses then they might start unloading them. Or not — perhaps they’ll open new property management wings and just turn them into rentals and enjoy the rental income.
My bottom line take on this situation is that as long as bailout money is being thrown at this situation and as long as the government is involved, it is impossible to determine the real value of these assets. Would you want to buy something that you don’t know the real value of? I wouldn’t…