What a great resource for the inside story on short sales!
I worked on a short sale with 3 different contracts over a year with a lender (Chase) to eventually say that they were not going to short sale the property. Now I know why. What a waste of time and effort on everyone's part.
When loan modifications are turned down, the next thing we attempt is a short sale. And we know 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 to stick with more familiar foreclosure process, losing money for everybody.
UPDATE: Huffington Post, November 2, 2009. Homeowners: "Hey Congress, Get Off Your 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?