Consumer Advocate: Mortgage Servicers Prefer More Profitable Foreclosures To Loan Modifications

From a press release from the National Consumer Law Center:

• Why have several recent programs designed to encourage loan modifications failed to slow America’s still-worsening home mortgage foreclosure crisis? A new report from the National Consumer Law Center (NCLC) discloses that mortgage servicers – including many large banks – have found it cheaper to foreclose on homeowners than to offer loan modifications that would benefit homeowners and investors.

• The result: Americans who might be able to stay in their homes under a loan modification plan are being moved right past that option and on to foreclosure. The new NCLC report, "Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior," reveals that servicers, unlike investors or homeowners, generally don’t risk losing money on foreclosures. In fact, servicers usually make money on foreclosures.

For the entire press release, see Avoidable Foreclosures Continue Despite Servicers' "Loan Modifications" (New Report Describes How Little Noticed Incentives Prompt Banks to Deny Relief to Homeowners).

Thanks to nationally recognized mortgage servicing fraud watchdog Mike Dillon at GetDShirtz.com for the heads-up on the report.

Go here for Mr. Dillon's commentary on a variety of mortgage servicing fraud issues.