[Cooter]

I am hearing repeated anecdotes from multiple areas that foreclosed property held by banks with multiple full-price offers that include a financing requirement are being sold instead to people with actual cash at radical reductions from that price. This implies that these financing contingencies are regarded as not only potentially no good but factually no good, as if the banks know for a fact that the credit pipeline will (not might), within weeks or months (in the time required to close), disappear. There is no other rational explanation for this behavior.

I would interpret this differently. This looks like the banks are desparate for cash NOW, rather than a moneymaking stream of cash flows (as they may not be in business to benefit from a long-term mortgage).....

If Bank A holds a property and gets multiple full-priced offers that are to be financed by Banks B or C, then it should not care about future income stream. At closing, Bank A would be paid in full. This is telling me that Bank A is not even confident that the buyer will be able to close. This is about taking cash today vs taking a promise of cash in 30 days or so.

[FromLori]

They did just announce a new stress test again today so that could very well be part of it too maybe they are worried they will not have adequate funds to cover? Though we all know what a joke that test was but maybe some who aren’t in on obamas payoff will get taken out otherwise.

http://rawstory.com/news/afp/Fed_to_widen_stress_tests_for_banks_10232009.html