The may well have little choice. As it is now, many houses are sitting empty and are a target for vandals. Swimming pools full of algae, etc. Entire neighborhoods sit empty in some areas. If the banks don't stop fooling around and sell these houses, they'll be in even bigger trouble later on. Eventually, when the bank goes under, the federal government ends up with the mess. Remember the Resolution Trust corporation set up to clear up the real estate mess lest over the the S&L crisis? We'll probably see something similar at some point.
it's not the foreclosures...it's carrying the bad debt of the foreclosures on the books(balance sheet) by holding the properties and not selling them(not to mention the blyth it puts on the streets with so many vacant houses)
More banks are allowing "short sales"(selling below loan value) as regulators are forcing banks to clean up their balance sheets.
In the 70's many banks set up Real Estate Management operations: maintaining; local Gov't enforcing code, sales & rentals as well as lease to own, ect.
The banks need to speed up the management of forclosures, instead of carrying the debt on their balance sheet that is worth less than the property.