Foreclosures Are More Profitable Than Loan Modifications?

The Washington Post printed an article today stating that in many cases, it’s more profitable for the lender to foreclose rather than work out a loan modification with the homeowner.

Finally, we have someone telling the REAL truth about why lenders aren’t modifying more loans!

A lot of people have been scratching their head trying to understand why lenders aren’t modifying more loans, especially given the government’s financial incentives to lenders to modify more loans.

As usual, the lenders are acting in their own self interests because they can. Remember, your taxpayer dollars are shoring up their bottom lines and now they don’t have to negotiate with you because they already have your bailout money.

It’s hard for me to imagine how it could be more profitable for a lender to foreclose rather than working out a loan modification given the falling home prices.

Of course, there are other reasons why modifications supposedly aren’t working. I keep hearing a lot about how lenders are woefully understaffed and underequipped to handle the sheer volume of homeowners who are asking for help right now.

This is just a weak excuse for the lender’s failure to act. Unemployment is at a record high in this country. CitiMortgage, Wells Fargo and Bank of America have a talented pool of unemployed workers who need jobs. Why aren’t they hiring more people?

So how can you fight foreclosure and save your home?

First, get a loan audit before you do anything else! Go here to learn more about how you can get a loan audit. If you can’t afford to have a professional auditor perform the audit, I’ve written a Do It Yourself Audit eBook that you can purchase.

Modifying a loan without a loan audit is a bad idea for several reasons.

First, if there are predatory lending patterns in your documents and you don’t know about them, and you modify the loan, you waive your rights to pursue the lender in court for the bad loan you originally received.

Second, if the lender lied to you by failing to disclose all the details of the loan, this is leverage against the lender to get a better loan modification instead of just accepting the standard loan modification they give everyone else.

Third, follow up with a competent professional who will aggressively represent your interests in forcing the lender to modify your loan fairly. I suggest you use an attorney for this – a good one will almost always get you a better result than you can get on your own.

I know, it sucks to have to hire an attorney. Many people got into this mess because they didn’t understand the documents they were signing, and a home is the biggest investment most people will make in their lifetimes. It’s worth it to pay someone to do it right.

Finally, consider filing a lawsuit against your lender if your loan stinks of predatory lending. When more people stand up to the banks, this nonsense of the banks not helping people will stop. We’re all held accountable for our actions as individuals; why shouldn’t the banks be called out for screwing homeowners and refusing to help them? I am working hard on finding attorneys who will be good partners for homeowners, so contact me for a referral if you need one.

If you have questions, post them in the forum or send me an e-mail: Christine@DesertEdgeLegal.com.

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