Banks to unleash flood of REOs

Part I: Impact on inventories lags foreclosures

Inventories of unsold homes are likely to swell in coming months as lenders begin to push a growing backlog of repossessed homes up for sale — often in communities already awash in distressed properties.

While builders have cut back drastically on the production of new homes (see story), it’s likely lenders will soon be putting pressure on inventories even if they succeed in efforts to keep more troubled borrowers in their homes rather than foreclosing on them.