Freddie Mac Says Typical Foreclosure Costs 60,000 Dollars
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If you are one of the thousands of American’s facing foreclosure, you may have a great deal more bargaining power than you ever thought. Analysis from Freddie Mac and large banks show that their cost to foreclose on your home is in the range of 60,000 dollars on average.
The high cost of foreclosing on a loan is ample evidence that if you are having a hard time making your housing payment, talk with the lender. They have a strong incentive to work out the problems with the loan and try to find an accomodation.
Unfortunately, most borrowers do not contact their lending institution until the problem is too late. A forthright and honest approach will provide you a much better chance of saving your home and keeping the property out of foreclosure. Freddie Mac says that 68 percent of low income borrowers could be spared foreclosure if lenders created a new plan for them.
According to mortgage financier Freddie Mac, the typical foreclosure cost is nearly $60,000. And officials at HSBC North America, parent of HSBC Bank USA, HSBC Mortgage Corp. and HSBC Finance Corp., say their average loss on sale at foreclosure is 20 percent to 25 percent of the loan’s value.
“We truly believe that foreclosure is the worst alternative for all parties concerned and go to great lengths to avoid foreclosure,” Brendan McDonagh, CEO of Illinois-based HSBC Finance and former chief operating officer of HSBC Bank USA in Buffalo, said in March testimony to Congress. “Financially, it is our worst alternative.”
So like First Niagara, most lenders today have so-called “loss mitigation” departments whose sole purpose is to try to prevent a loss to the bank. But that also means doing whatever necessary, to a point, to help borrowers keep up with their payments and stay in their homes.
“Loss mitigation is working with borrowers to avoid foreclosure,” said Judith Palmer, loss mitigation manager at M&T Bank Corp. “Foreclosure isn’t good for anybody.” via The Buffalo News
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Comment by john harper on 7 May 2007:
Tom - really appreciate insight like this. We have several clients in dire straits and we love to send them links to great articles like this.
Comment by Anthony on 8 May 2007:
Great blog indeed.Mortgage refinancing adds to online mortgage services.
Pingback by - ProActive Foreclosure Prevention - Harper Team Blog on 5 July 2007:
[…] Freddie Mac Says Typical Foreclosure Costs $60,000 – If you are one of the thousands of American’s facing foreclosure, you may have a great deal more bargaining power than you ever thought. Analysis from Freddie Mac and large banks show that their cost to foreclose on your home is in the range of $60,000 on average. […]
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Comment by Christine on 7 April 2008:
This is a load of crap! I am sooo depressed and aggravated right now! I got my hopes up with articles such as these that my husband, I and our 2 kids would be able to keep our first home. However, HSBC has not helped us whatsoever! I have been calling often for weeks now to no avail. I have spoken to several supervisors and noone wants to help us. They told me that there is nothing they can do and that we would need to refinance! Our loan is 210k and our house is currently worth 80k. Refinancing is not an option! Mortgage companies act on the news and articles like they are bending over backwards to help people and the fact of the matter is it is apparantly all for publicity and show because they do not care about their people!
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