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SHOCK! Lenders make more money on foreclosures than short sales!?

Reblogger Richard Roux

Real Estate Agent with Watson Realty Corp., REALTORS

November 07, 2009 07:28 AM

Lenders make more money on foreclosures than from short sales or loan modifications. That's what Steve Harney converyd in a seminar. He caused an earthquake in San Francisco

When loan modifications are turned down, the next thing we attempt is to do the short sales. And we kinow that lenders turn over the short sale accounts to loan servicing companies who make our lives hell getting short sales approved. As such, we should know that these loan servicing companies make MORE money by letting the properties foreclose than to approve the short sales OR the loan modification.

RUMBLE...GRUMBLE...CRIES OF DISMAY!

Did he just confirm what we were afraid of?

So I researched this topic and found a few articles worth reviewing. How did I miss these? Was I under a rock in a desert?

CONSUMERLAW.ORG REPORt ON "Why Servicers Foreclose when They Should Modify And Other Puzzles of Servicer Behavior"

DAILY PRESS headline. Oct, 30 2009. Do Mortgage Lenders Make More Money when a Loan Goes iInto Foreclosure?

HUFFINGTON POST. Oct. 21, 2009, Foreclosures Are More Profitable Than Loan Modifications, According To New Report

Washington Post. July 28, 2009. Foreclosures Are Often In Lenders' Best Interest. Numbers Work Against Government Efforts to Help Homeowners.

ThinkGlink. October 21, 2009. Loan Modification Help: Why Lenders Are Slow To Provide Loan Modifications

Dayton Daily News. Oct. 17, 2009. Drop in foreclosures called "very scary". Lender's actions show they think properties are not worth pursuing.

Mortgage101.com. October 23, 2009. Mortgage Companies Make More on Foreclosures Than They Do Modifying Existing Loans. (This blog refers to the news article on Huffington Post)

FLASHBACK: Huffington Post, June 8, 2009. Short Sales: Banks Blocking Way Out of Foreclosure Crisis

FLASHBACK: Huffington Post, May 15, 2009. Short Sales Stories. Lenders tend tostic with more familian foreclosure process, losing money for everybody.

UPDATE: Huffington Post, November 2, 2009. Homeowners: "Hey Congress, Get Off You A**"

KNOCKING OURSELVES OUT TRYING TO HELP

So are we engaging in self-flagellation helping our distressed clients with their short sales and loan modification?

Are lenders really more likely to foreclose?

Are the short sale servicing companies really trying to help?

Or are they stalling and withholding their help because they know their leaders would rather have the property burn into foreclosure?

Is there no resolution in signt?

There oughta be a law!

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Terri Onigkeit

Keller Williams of Northern Colorado - Fort Collins, CO

GRI

Wow, I have bee doing so many short sales and did not know this.

Nov 08, 2009 12:34 AM

Michele Reneau

Certified Staging Professional (CSP) Elite Instructor - Summerville, SC

Realtor, GRI ~ Charleston, SC Relocation Experts Team

Richard-I'm shocked to hear this. When I think of the money lost on a foreclosure, I think of lost interest payments as the owner resides in the house without paying the mortgage, attorney and court fees for the foreclosure process, deterioration of the property and lack of maintenance on a vacant house (sometimes, it can take 6 months to a year or more for the property to go on the market) all contribute to a low list price once the house goes up for sale as a foreclosure. Throw in falling values and it seems like it would be better for the bank to just get rid of it especially when they have a ready, willing and able buyer.

Nov 08, 2009 05:34 AM

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