In my Blog Deficiency Judgments: Why aren't Florida Lenders Using Them? I asked: Why are banks not selling their foreclosures? This Blog by "Patrick.net" seems to touch on part of the answer to that question:
"One answer is that if the banks were to really sell their foreclosures for what they’re worth in the open market, that would devalue the collateral they hold on all their other mortgages, rendering the banks instantly insolvent.
The other part to the answer, contributed by reader Jacob F., is that banks are collecting mortgage insurance (PMI) on the defaulted loans every month, covering the expenses of leaving these houses empty.
As PMI and the other mortgage insurers inevitably go under from the sheer number of foreclosures, that will end, and the banks may at last hold the fire sale that responsible buyers have been waiting for."
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