Inventories of REO's have been piling up as banks have sped up the process of reclaiming properties through a number of methods including judicial and non judicial foreclosure ("Deed in lieu" of Foreclosure). Banks have been letting these properties pile up partly because there processes have been flawed and partly because they are waiting for a recovery in the housing market so that they do not have to write down huge losses.
In the coming year the banks will have to bite the bullet and bring more REO's to the market because of political and market pressure.
Watch closely what the lame duck session will be doing. They may possibly pass many more bills spending taxpayer dollars which the people do not want.
Well the election hasn't changed the number of foreclosures that are looming and nobody has come up with a solution to the problem.. The toxic debt was not disposed of, but absorbed by the taxpayer, the Home Affordability Act has failed to help the majority of homeownerfs in distress and the HAFA loan modification program is a complete joke. Unfortunately the only fair solution in my opinion is to let distressed homeowners go through the foreclosure process. That creates certainty and clarity and allows true market forces to determine future home value. More pain to come and maybe 5 years of bouncing along the bottom with possibly 10 to 15% more downside to property values. Unfortunately when the market is cleansed and ready for a rebound there will be higher interest rates to deal with.
On the bright side, there will be lots of bargains out there!