If you are like nearly 3 million other homeowners in the country you have gotten a foreclosure notice from your home lender this year. It costs the banks nearly $60,000 to process a foreclosure that goes to repossession so the lender typically takes a beating in the process. So why do they make it so hard to renegotiate?
Here is an explanation from CNBC:
But the main problem is that so many mortgages have been grouped together into securities and sold off to investors worldwide. These mortgage-backed securities typically carry terms that severely limit the homeowner’s ability to renegotiate a mortgage.
So the banks that typically service the mortgage—collecting payments from homeowners and passing them on to the investors—risk being sued if they deviate from these terms. And those servicing the loans often make more money in foreclosures than in renegotiating a loan, giving them even less incentive to help out homeowners. via CNBC.com
So banks are fighting an issue we all have to fight, doing a good deed takes a great deal more work. To save the bank and the lenders money, there are difficult hurdles that need to be cleared. Finding out who has packaged the loan. Negotiating with them and the homeowner. Determining if it will save the bank money in the long term. All why the bank employee is absolutely overwhelmed with work as they are seeing more foreclosures than ever before.
So if you have a mortgage held by local bank and you are facing foreclosure, you have a much better chance of getting a sympathetic ear to discuss a renegotiation with. If you have a loan that has been sold a couple of times and securitized, then the chances of working out a deal is much more difficult.
That is why banks are having a hard time working out short sales or reworking the mortgages, so many of the factors are beyond their ability to cope with right now that it is easier to lose money.