ForeclosureBuzz.com has posted an article and a video that discusses why loan servicers still prefer to foreclose on a home rather than pursue a loan modification. The short answer is money. If there was the money to do a lot of modifications, loan servicers would be much more willing to modify loans to save homeowners from foreclosure.
Instead they always give excuses for not being able to modify a loan such as program/personnel issues, lack of authority, or other reasons. Sometimes they say that the modification program is strained because they are helping lots of people. While it’s likely true that the modification program is strained, it’s not due to the number of people they’re helping. If that were true, then the foreclosure department wouldn’t be so busy.
Also, lenders are suspiciously careful when processing modifications…as opposed to foreclosures where they conveniently ignore laws. When it comes to modifications “they want to cross every t.”
Robert Doggett, writer of the article, says the reason behind loan servicers’ double standard is simple: money. They can make more of a profit by foreclosing on a property than by modifying the loan. You can check out a video of Mr. Doggett’s testimony against loan servicer abuses here:
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