Banks have been reeling under the weight of ever increasing REO properties in their possession.  The financial condition of most banks is desperate, or pathetic to say the least. In a bid to save on the holding costs of REOs, banks have begun to default on the local property taxes on properties with low values. FDIC has issued a warning to the banks regarding this issue while also reminding them of the proper steps they need to follow in managing the REO properties under their management.