A new NCLC report, authored by Diane E. Thompson, finds that mortgage servicers—including many large banks—have found it cheaper to foreclose on homeowners than to offer loan modifications that would benefit homeowners and investors. Americans who might be able to stay in their homes under a loan modification plan are being moved right past that option and on to foreclosure.
“Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior,” (Oct. 2009) (50 pp.) includes a detailed examination of loans in foreclosure from 1995-2009 and how components of servicer compensation affected the likelihood and speed of foreclosure. It also looks at oversight of servicers by credit rating agencies and bond insurers, and how that oversight too often encourages servicers to foreclose.
Among the report’s findings are that “Loan modifications inevitably cost the servicer something. A servicer deciding between a foreclosure and a loan modification faces the prospect of near certain loss if the loan is modified, and no penalty, but potential profit, if the home is foreclosed.” The report also found that servicers often deny homeowners principal and interest rate reductions because as servicers they find it profitable to offer repayment plans or forbearance agreements that do little to reduce homeowners’ debt burdens.
The report is found on NCLC's website and by clicking here.
Hello to all!
Exelente information, it seems to me to be very interesting and I like to receive more information of this topic
Thank you!
Good luck!
Posted by: home for sale costa rica | Monday, July 05, 2010 at 08:06 PM
Great article, Thanks , but the Obama loan modification is the federal government’s answer to the rising need of preventing foreclosures for American homeowners.
Posted by: Samanta shilly | Saturday, January 09, 2010 at 08:13 PM
Found the information worthy as I had no idea of posting a comment on the blog,.
Posted by: storesonline033 | Tuesday, November 10, 2009 at 06:05 AM