Lenders refuse to negotiate mortgages, waiting for rescue from Obama

They will all deny it if asked, but my conversations with people who are trying to prevent foreclosure by negotiating new terms indicate that they are running into yet another obstacle: Lenders are stalling.  They are “losing” paper work, changing staff on cases, and finding other excuses not to negotiate.

The problem, we think, is that the lenders believe that President Elect Obama, in his desire to help homeowners in trouble, is going to do something that will help the lenders and investors get more of their money from properties threatened with foreclosure.  For example, the Obama administration might decide to buy up the mortgages at, say, 80 cents on the dollar.  That would produce some losses for the lenders but not as many as they might get from a renegotiation.

The general opinion is that the new administration will start with a six-month moratorium on all foreclosures while it decides what to do.  That will at least forestall evictions for a while.

We have dealt extensively with the topic of Foreclosure at this site. For more information, see:

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