An old real estate axiom goes that once a home has gone through foreclosure, and the sooner a lender can sell the property the better. After all, a non-performing asset is bad for a lender’s books and the sooner the escrow closes, the quicker the lender will be able to recover his losses. However, recently an appraiser paired the online foreclosure databases (found at either Realtytrac.com or ForeclosureRadar.com ) against the statistics found in the local Realtor MLS (multiple listing system) inventory, and noticed something rather peculiar: the datasets don’t reconcile.

He discovered that the number of foreclosures posted in Online sites far exceeds the sum of listings and sales found in the realtor multiple listing system. Roughly 70% of foreclosures in the onlines database ARE NOT listed in the MLS system. Why? He reasoned that perhaps banks might be trying to defer the losses to a later date, because having to recognize the losses short term might pose severe risks to the banks in question. Can this be true? Are zombie banks holding back these houses from being sold because the banks are insolvent and can’t afford to take the loss? Or is something else happening? Here are three other possible ways to explain the disconnect.

1. Foreclosure Data is Not Standardized. Most internet websites do not have a standard definition of what constitutes a foreclosure. Most, for example, will consider a property being in foreclosure when the homeowner has missed making three payments and a Notice of Default has been filed with the County Recorder’s office. But what about the homeowner who has reinstated his loan? These usually still show up as a foreclosure long afterwards on the Internet, but don’t show up in the realtor multiple listing service (because many were never registered there in the first place).

2.Short Sales. Online websites do not differentiate short sales from foreclosures. A short sale takes place when an owner owes more than the selling price, and wishes to sell the property at fair market value. The lender may agree to reduce the principal to help the owner do so, but it takes on average about nine weeks to review and approve a short sale package. During this time to an Online website, the property will be counted as a foreclosure and at the same time not show up in the MLS statistics as either an active listing or a closed sale.

3. Loan Modifications. Many owners are advised by loan mod experts to avoid making a payment or two in order to show the need for a modification to a lender. Although under the new Obama Financial Stability Plan this is no longer necessary, in the past, many owners have followed this advice. To an online Foreclosure website, it might appear that the owner is definitely in foreclosure, yet at the same time because the owners wish to remain in their home, the property will not show up in the realtor’s MLS database.

Naturally this does not explain everything. There will still be homes that fall through the cracks; damaged properties with toxic mold for example, that will be placed on hold while the lender settles with a knuckle-dragging, insurance company. There may also be a logic explanation for the disconnect that might have more to do with the government regulations that banks have to follow than anything else. But the idea of a Night of the Living Dead scenario, filled with understaffed zombie bank personnel walking the earth while they are doing the best they can under these current challenging circumstances, that umm, that could never happen, could it?