Regarding point 3. I have NEVER seen an instance in our market where a foreclosure is better then any other option. In every file I've looked at, the bank would lose WAY more money then either a short sale or a loan modification. The people that call in to talk to us about a loan mod or a short sale are usually about $100k underwater. Add on top of that the reduced price of an reo listing and the other costs for a bank to sell a foreclosure and it starts to make sense why some of the $50k homes have gone 18 months with out a payment and not a word from the bank.