I'm wondering if the explanation is faulty here. On the properties that where the banks did foreclose, what happened to them? Are they still on the banks' balance sheets? Or were they able to resell these properties? That seems pretty critical to explain what happened, but the piece provides no evidence on it, one way or the other. The piece is good at explaining that those working on foreclosures were for the most part incapable of acting with discretion.
