12  See U.S. Department of Housing and Urban Development (2001), U.S. Housing Market Conditions (PDF) (Washington: HUD, November), available at www.huduser.org/periodicals/ushmc/fall2001/index.html. BIS central bankers’ speeches  5  can be prevented. Given the weak economy and high unemployment rates, some borrowers simply do not have the wherewithal to meet monthly mortgage payments even if their loans were to be substantially modified.
Therefore, we have seen increased interest in whether anything can be done to reduce the overhang of empty and foreclosed homes.13 We estimate that about one-fourth of the excess supply of vacant homes for sale in the second quarter of 2011 was owned by creditors; these homes are often referred to as real estate owned, or REO properties.14 Moreover, Federal Reserve staff estimate that distressed sales, which include both short sales and non-auction sales of foreclosed homes by REO holders, now account for 30 percent of home sales.