What the lenders are really doing with short sales

[Patrick H.]

I went onto the metrolist for my region and noticed that most of the properties are listed as short sales. I have read elsewhere that the listing agent might list the property below what the lender really needs, to get as many offers as possible....maybe hoping the lender will accept one of them?

The lender can just sit on the offers to try and create artificial demand, hopefully raising the price of the properties. The lender may not have any incentive to accept an offer since they would have to recognize a big loss. Since the government is supporting some of the big lenders and possibly indirectly supporting the smaller lenders, the lender can just sit around until the market recovers. The property will decay, but maybe the lender is not concerned since the government is providing support (or should I say the taxpayer is).

Is something like this happening to some extent or are lenders really trying to get everything off their books?