The White House has asked mortgage executives to come up with the manpower to stop precarious loans from becoming foreclosures, but a New York Times story says finance experts say a lack of bodies isn’t the problem. It’s greed.
Mortgage companies collect fees for appraisals, insurance, legal services and other administrative busywork when homes go into foreclosure, and many make more on delinquent loans than they do on those in good standing. So unless homeowners’ loans are through businesses that values their ability to keep roofs over their heads above the bottom line, they’re out of luck:
“It frustrates me when I see the government looking to the servicer for the solution, because it will never ever happen,” said Margery Golant, a Florida lawyer who defends homeowners against foreclosure and who worked in the law department of a major mortgage company, Ocwen Financial. “I don’t think they’re motivated to do modifications at all. They keep hitting the loan all the way through for junk fees. It’s a license to do whatever they want.”
Until legislators give mortgage servicers a reason to help those in trouble, expect the foreclosures to keep piling up.
Lucrative Fees May Deter Efforts to Alter Troubled Loans [New York Times]