Foreclosures Are Often In Lenders' Best Interest.
this is the title of a recent foreclosure article from the Washington Post
Government initiatives to stem the country's mounting foreclosures are hampered because banks and other lenders in many cases have more financial incentive to let borrowers lose their homes than to work out settlements, some economists have concluded.
Policymakers often say it's a good deal for lenders to cut borrowers a break on mortgage payments to keep them in their homes.
But, according to researchers and industry experts, foreclosing can be more profitable.
The problem is that modifying mortgages is profitable to banks for only one set of distressed borrowers, while lenders are actually dealing with three very different types.
Modification makes economic sense for a bank or other lender only if the borrower can't sustain payments without it yet will be able to keep up with new, more modest terms.
A second set are those who are likely to fall behind on their payments again even after receiving a modified loan and are likely to lose their homes one way or another.
Lenders don't want to help these borrowers because waiting to foreclose can be costly.
Finally, there are those delinquent borrowers who can somehow, even at great sacrifice, catch up without a modification.
Lenders have little financial incentive to help them.
Read full article at http://www.washingtonpost.com/wp-dyn/content/...
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