The REO industry has become more dynamic and quite challenging. Everyday, there’s a new development that could catch players off-guard. For example, it was widely believed that mortgage defaults might not turn for the worse this year but the way things are, expectations have not exactly been met. Mortgage defaults have actually become even more of a problem, especially during the fourth month towards the sixth. Again, this is but a clear indication that nothing should be taken for granted and while projections may be true, they are not absolute.Even if you’re dealing with a small locality, nothing can be taken easily. For example, properties declared as REO in St Louis are not too many but it doesn’t mean the market is not affected. Simply put, there’s no way of telling how the REO industry takes a turn and for this reason, everyone who will have an interest in it simply has to be prepared for the worst at all times.Now, it is quite clear that REO properties are not going to become less of a concern when it comes to real estate listings. And people are again projecting that this will be the case until 2013. The increasing number of jobless people is being named culprit and those who thought unstable prime mortgages were responsible have been proven wrong.Some projections became true, however, such as people with clean credit records having trouble settling their payments due to job-related reasons. Some of these are attributed to lessened working hours while in other cases, workers simply lost their jobs. The picture has gotten shadier with mortgage defaults being at such high levels and statistics showing a considerable number of homeowners having to deal with foreclosure mortgage and an even larger percentage having at least a month’s worth of payment backlogs.A lot of banks and lending institutions are actually offering options but they do not prove to be doing much because most homeowners are finding it difficult to pay even reduced amounts. Refinancing has also been ruled out by most because that would mean they have to pay a larger amount to the financial institution than how much their property is currently worth.There’s probably close to a million people right now whose houses are about to be foreclosed and the figures aren’t going anywhere but up. That’s because most of these properties have not been officially declared REO. Building new houses isn’t even an option and with the way things are going, REO properties just might be headed for crazy highs in the near future. This is, by far, the biggest challenge for banks and lenders in preparing these properties for the market.