Does anyone else think banks foreclose when they could modify a loan as they will make more money on the sale?

Question

Specifically, in my case, I owe less than the house is worth, much less. I think the bank is dragging their feet in working my loan modification. My counselor is AWFUL!! They claim to have lost my paperwork 3 times, and of course continue towards foreclosure, now less than 30 days away. They have had the docs since June!! And yet say they can modify at the click of a button, and are just now working the ones that foreclose later this week!!

A lot of people have suggested selling the house. The problem is that they have promised us a loan mod for the last 90 days- and kept saying it was not a problem. Now, we have a pending sherrif sale date, less than 20 days away. They have taken it to the edge to a point that we no longer have the opportunity to sell it in time.

Answer 1

The people who work for the bank are salaried employees.

They do not really care what is best for the bank. They care more about keeping their jobs and getting paid regularly.

They do what the bank managers tell them to do.

In most cases banks want nonperforming loans off their books.

The employees who want to keep their jobs do their best to get the non performing loans off the books. In the past the best way to do that has been to foreclose on the property as soon as the homeowner is late on the mortgage payments.

In the past the bank could resell any foreclosed homes that it took back very quickly.

In today's market the banks are finding that it is not so easy to sell their foreclosed properties.

Upper management has been slow to come up with an alternate stratgy. The result is that the low level employees who are responsible for the foreclosed properties keep foreclosing on the properties as soon as the homeowner is late on his payments.

As the banks build their inventories of unsold foreclosed homes that they must maintain, the upper management level employees will eventually figure out that they need to develop a new strategy of dealing with homeowners who can no longer make the payments on their mortgages.

Unfortunately upper level managements at most banks tend to be very slow learners.

It is going to take upper level managements some time to figure out what else they can do when homeowners can no longer make the payments on their mortgages.

Answer 2

No.. banks hardly ever actually make money on any sale. They often lose a lot of money. They make money when you make your payments as scheduled, and pay the interest. Banks are not in the real estate business (not by choice) they are in the loan business. Also, too many foreclosures and non performing loans can cause a bank to be downgraded, and even shut down.

If you have a legitimate sales contract, when you go to the court hearing WITH your realtor, the judge can stop the foreclosure. I have even seen them stopped when the realtor showed up with marked data showing that the house is priced x percent below market, and is expected to have a contract within x days based on market statistics. The judge will set a court date for mabye 60 or 90 days from then to see if there is a contract. If not, then they move forward.

So, stop delaying. Put the house up for sale to save your equity.

Answer 3

Banks in most cases LOSE on a sale when they foreclose. Many of the mortgages being foreclosed are 'upside down' (more is owed than the property is worth at sale). Additionally, there are attorney fees and court fees involved in processing a foreclosure, which can add up to several thousand dollars.

This is not a money making deal for lenders. Why do you think CitiGroup and Merrill Lynch have each written off $4 billion in the fourth quarter of this year ?

Answer 4

It costs a bank about $50,000 to foreclose on a property. Therefore, no...they will not make more money on the sale of the house. The reason that it is probably taking so long, is that there are literally thousands of people in the same situation and fewer people trained in loss mitigation than they need to have in those positions.
You say that you have equity in your home. Then why are you allowing a foreclosure to happen. Have you tried to sell outright? Call the people at HouseBuyerNetwork.com to see if they have a quick sale agent or professional home buyer in your area to help you. Avoid foreclosure at all costs. It will destroy your credit for many years.

Answer 5

banks are lending institutions. they are not realtors.
I have seen a few instances that led me to believe they have personal interest in a property with a balloon payment coming due. If this is a loan you are paying on they can do nothing until you are behind on payments.
If this is the case just make your payments as agreed.
If they refuse payment talk to a lawyer and get paper for them to sign stating they refuse payment. They know better than to admit they refused a payment.

Answer 6

I paid in enhance some circumstances and have been given the overdue letters; yet my lender isn't as competitive as BofA so i did not get the foreclosures letters. once you pay early, they are going to be conscious that fee on the tip of the internal maximum loan in the direction of the thought. you should call and attempt to paintings some thing out with them. it is BS they did not inform you this. seem up your financial employer archives etc. BofA is with reference to the trashiest POS financial employer all of us ought to ever manage and that i'm a hundred% particular that they are attempting to boot you out of your place. Sorry to pay attention your dealing with this :(

Answer 7

If you really owe "much less" than the house is worth..... sell it.