| Why Lenders Might Not Be Willing to Take Loss with a Short Sale |
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(5/13/2008) : An interesting article in the May 12, 2008 issue of Newsweek, might shed some light on why Lenders seem unwilling (or less willing than we would expect) to work with a Short Sale offer and take a loss on a refinance. We are all bombarded by media reports about how bad the current situation is...Foreclosure filings are way up, Home prices have fallen, etc. The increased number of Short Sale and Bank REO listings in our market is undeniable. But perhaps it isn't quite bad enough for most Lenders to want to restructure loans and take losses prior to Foreclosure.
Jane Bryant Quinn writes "A surprising number of mortgage investors, however, are doing OK. When subprime mortgages were bundled and sold, portions of the pools carried lower risk. That's where about 70 percent of the investments went. Enough borrowers are still making payments on their loans to keep those portions profitable." "As a result, the investors have little incentive to restructure loans in default. If a mortgage goes bad, it's in their interest to foreclose fast, to get the maximum amount of money out." Read the entire article online at: http://www.newsweek.com/id/135406
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