Quelle Surprise! Banks Taking Big Losses on Real Estate Disposals

"Remember a few months ago a big secret in plain sight was that many banks were awfully slow about foreclosing on deadbeat homeowners. Some of this was arguably not due to gameplaying but a function of overloaded servicing departments that were understaffed and backed up. But in many cases, the belief was that the delays were by design. Banks didn't want to report higher levels of real estate owned (REO) which is where the homes wind up if no one offers more than the mortgage balance at the foreclosure auction. Some banks also may have preferred to keep homeowners in place, since a vacant property deteriorates and depresses values in the 'hood. And some chose to present their strategies to flatter their financials as a benefit to homeowners, as Wells Fargo did last quarter in changing its foreclosure policies (and related accounting) to extend the process."