Millions of Americans have applied with their banks to obtain a loan modification. They desperately need loan modification help. The loan modification process is taking an extremely long time. Now homeowners want to know how they can get a loan modification -- whether under the Obama Making Home Affordable Plan or not -- and why the lenders are slow to provide loan modifications. A new study is revealing some answers.

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, according to “Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior,” a new report from the National Consumer Law Center (NCLC).

And as every good investor knows, net profit isn’t just about the rate of return. It’s also about how well you hold down the expenses associated with that investment.

Most homeowners assume that foreclosure is a money-losing proposition for lenders and investors. There’s a lot of talk that with a short sale, a lender might only lose 10 to 20 percent of an investment. But with foreclosures, lenders might settle for 20 to 30 cents on the dollar or more.

These numbers would seem to point mortgage servicers toward doing more loan modifications. But as the recent RealtyTrac foreclosures number showed, the third quarter had the highest number of foreclosures on record.

“The country is in the midst of a foreclosure crisis of unprecedented proportions. Millions of families have lost their homes and millions more are expected to lose their homes in the next few years,” noted Diane E. Thompson, an attorney with NCLC and author of the study.

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