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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Incitatus who wrote (70632)10/29/2007 1:21:18 PM
From: Metacomet  Respond to of 116555
 
"Isn't it better to hold a house that's "worth" $400k than to sell it for its fair market value of $200k?"

REO's, or Scheduled Items, are carried as impairments to reserves.

Since lenders are able to loan a multiple of their reserves, thanks to the magic of fractional banking, an REO limits their ability to loan substantially more than the amount they have in it.

REO's are quite literally anchors on their balance sheets.


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