So my 1st REO offer was rejected with no explanation.

The bank that i am using has been requiring me to submit "So Much" information. examples:1. copies of all my bank accounts and explanations of every large deposit2.

LOL which is not a sub prime borrower but funds were going to sub prime neighborhoods.The banks know were the foreclosure clusters are.. a friend of mine works for company that  that is all they do is analyze risk by demographic and geographic areas they can tell a bank up front basically what they will deal with with defaults and how much to put aside.There were PLENTY of high wage earners 700 plus ficos in CA that got wiped out.. and they also borrowered as Chris pointed out ( crappy loans) because of the RE craze.. it was all over the place. 

Calif CC 1695 is such a case and this link is a fair explanation.

This explanation could get lengthly, but to make a long story short. it could be better for the seller to not get taxed on the gains all at once, but rather space it out over several tax years. 

@Dave Foster, What a great explanation, thanks so much.

Definitely with the SFH explanation you gave, ties into what Ive been learning and it makes sense now.

@Dan Clark Have you asked him directly for an explanation?  

Most people looking to invest in real estate have a local mentality with regard to their geographical scope.

Ask a follow up if you need explanation on any of these.