Homeowners Hurt By Banks' Foreclosure Bias

Abstract

Banks and loan servicers often foreclose on properties even if homeowners have more to gain from loan modifications, according to the Center for Responsible Lending.

Banks and loan servicers often foreclose on properties even if homeowners have more to gain from loan modifications, according to the Center for Responsible Lending. CRL says its research shows that reducing a homeowner's monthly payment by up to 20% is better for investors than foreclosure. But banks shy away from modifications, according to Bill Frey, president of Greenwich Financial Services, because "it pays for banks to keep mortgages in a state of suspended animation, because they can collect late fees while also protecting second mortgages that are in the bank's portfolio."

Click here to read the release from the Center for Responsible Lending.