Any one who has kept up with the economic news is well aware that the number of foreclosures are up all over the US. In some cities the number of loans in default are so high and the amount of inventory for sale is so high that the banks are just letting people stay in their homes without payment. The banks know that to foreclose would only add an additional home on an already burgeoning market.
The banks are finally wising up and are trying to do more loan modification and short sales. Loan modifications are often only a band-aid. If the borrowers’ situation does not change such as employment, more people contributing to payments or home sale, then lowering the payment is not usually successful in the long run.
What has been successful is allowing a short sale meaning upon receiving a contract for the sale of the defaulting home the lender allows the borrower to short what is owed to the bank and sell the home to a prospective buyer. The bank looses approximately 36% on a short sale and 57% on a foreclosure. It makes you wonder why the banks have been so reluctant to pursue a short sale.
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“Banks Start to Embrace Short Sales”
