There’s a precedent for REOs becoming rentals in SoCal from the early-90s. But, it didn’t happen very often. But I recall hearing recently about a bank that held onto about 500-600 SFR properties during the early-90s and rented them out and then sold them in the late-90s. It happens, but it’s pretty rare.
Given what’s happening right now, however, nothing would surprise me.
