Banks' Foreclosure Bias Hurts Investors
New research by the Center for Responsible Lending finds that banks and other loan servicers often foreclose when investors have more to gain from a loan modification. The study—" Fix or Evict? Loan Modifications Return More Value than Foreclosures"—also finds that the industry's poor track record on loan modifications can't be blamed on homeowners who re-default. The research involved running more than 1,500 simulations of the test used by loan servicers to determine whether to modify distressed mortgages or foreclose. CRL found that even with hypothetical re-default rates as high as 79%—much