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Author Topic: Banks lose with foreclosure too  (Read 3944 times)

Offline tedmosby

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Banks lose with foreclosure too
« on: November 15, 2013, 02:08:27 am »
Contrary to popular belief, banks arenít thrilled at the prospect of foreclosure any more than the homeowners being foreclosed on. Thatís because homeowners arenít the only ones that lose in foreclosure. Banks lose as well. When a borrower can no longer make mortgage payments and after other avenues have been exhausted, foreclosure is the lenderís last resort. Essentially, the bank cuts its losses and tries to get back as much as it can through foreclosure.

Foreclosure costs rise with housing market

Since 2011, home prices have risen nationally by 14%. You might think that with rising house prices, banks would no longer be losing very much through foreclosure, but that isnít accurate. One explanation for this is that the foreclosure process has been lengthened in recent years to protect homeownersí interests. Because the responsibility of maintaining the property of a foreclosed home until it can be sold falls on the bank, the longer process equals higher costs. Today, a home is in liquidation for twice as long as it was in 2008 when the housing crisis began.

What it all means

All of this boils down to favorable circumstances for homeowners behind on mortgage payments. Though many borrowers mistakenly believe that their bank is out to get them, in the vast majority of cases, foreclosure is not a bankís preferred outcome. They would much rather the borrower to catch up on their mortgage, even if that means lowering the interest rate or extending the repayment period.

If you are behind on your mortgage and nearing foreclosure, donít assume that your bank is unwilling to work with you. Chances are your bank is anxious to find a solution with you. At worst, you can pursue a short sale in which your property is sold off for less than itís worth. You get out from under your mortgage and your lender saves on foreclosure costs. In many cases your lender may be able to grant a loan modification to make mortgage payments more affordable.

Remember that the worst thing you can do is cut off all communication with your lender. Keep a line of communication open and both you and your lender may benefit from it.

Business, real estate, and bankruptcy law and litigation news brought to you by mbblegal.net

Source: thestreet.com/story/12104371/1/banks-still-losing-money-on-foreclosures.html

Offline alexnoiz

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Re: Banks lose with foreclosure too
« Reply #1 on: November 21, 2013, 12:43:38 pm »
Great information. Thanks for sharing. 
Get know more information about motgages and lenders at www.Homemortgage.net.

Offline Gladwin Elton

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Re: Banks lose with foreclosure too
« Reply #2 on: November 21, 2013, 02:38:33 pm »
Aren't real estate prices actually increasing again?

 




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