No one is surprised, just consternated.

RealtyTrac, who gathers and publishes information on foreclosures and short sales throughout the nation, is wondering in its October newsletter where all the lender-owned property is. Lots of default notices have been filed, but the number of lender-owned properties, where the lender would have repossessed the houses at auction, is not commensurate with the default filings.

Granted, it takes time to process title issues from the time of sheriff's sale to the time when the lender can list the property with an agent.  Moreover, the sheer number of properties may be causing a backlog in the processing.

But it's still possible, the publication suggests, that the banks are holding properties off the market so it won't be flooded.  More inventory will mean more price depression.

But the article also is suggesting that properties are being kept off-market in the hope that the federal givernment will create a "bad bank" to buy these depressed properties in a manner similar to what was done following the savings and loan mess in the 1990's. Some of us remember the Reconstruction Finance Corporation. In fact, the suggestion is that lenders are purposely holding back properties in order to apply leverage against the government to create such an entity.

Scary, but I'm not surprised.