Some banks, in many states, are actually donating some of the bank owned homes. Then paying to DEMOLISH them. Give the land to the community and, of course, get a tax write-off. They say it will barely make a dent in the inventory. But, it makes some good sense. If the home is that uninhabitable, and would cost an astounding amount of money to make it salable, the costs out-weigh the benefits, right? I'd say so. And, in the long run, every little bit of inventory that we can dispose of, whether by REO sale or bulldozer.....is again, a faster (by molasses standards) recovery.
Bank of America is the leader, with Wells Fargo, Citigroup and Chase considering going along this road as well. Not a ton of homes, a few thousand only.
I certainly don't think the values here in Southern California have dropped enough to warrant a bulldozer driving down Valencia Blvd, but I do know there are certain areas in our country where this 'Cash for Clunkers' type of demo would benefit very well.