Homeowners often wonder “Why won’t the mortgage company (or servicer) agree to modify my loan so I can avoid foreclosure and still make payments every month? It just doesn’t make any sense.”
There are many reasons but I’ll just give you . . . oh . . . say . . . 10,000 reasons . . . .
Once a loan is 90 days or more overdue, servicers charge processing and foreclosure fees along with markups for attorneys, appraisers and other services. That’s on top of monthly late fees that can run as high as 5 percent of the mortgage payment. A foreclosure on a $200,000 mortgage may result in $10,000 or more of income for servicers, who get paid before mortgage investors, according to Glenn Russell, a real estate attorney in Fall River, Massachusetts.
“Servicers can easily make 10 times any of the government stipends being offered by simply foreclosing on the house,” Russell said.
To put it bluntly and accurately without any fluff:
“Servicers love loans that are in default for an extended period of time,” McDonnell said. “They are cash cows.”
These enlightening quotes are from a fantastic story by Kathleen M. Howley entitled “Mortgage Servicer Profits May Threaten Obama Housing Programs”
So, if you ever wonder why your mortgage company seems so unwilling to help . . . so dead set on seeing you lose your house in this market where your house is not worth what you owe . . . remember — $10,000 is what the servicer makes. As people often say – “follow the money“. . . good advice here.
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