Why you probably won't get a Loan Modification.

Do you ever wonder why it's so hard to get a loan modification? Or wonder why there are so many reports that the government program set up to help people accomplish them isn't working?

Here's one reason:

A new study conducted by the National Consumer Law Center (NCLC) revealed that servicers make more money when a loan goes into foreclosure than if it is modified.

According to the report, Mortgage servicers (companies that collect monthly mortgage payments and distribute them to investors) found it is cheaper to foreclose rather than offer loan modifications that would benefit homeowners and investors .

They examined foreclosures made from 1995 through 2009 and found that loan servicers made more money by offering forbearance or payment plans than by cutting principal or offering reduced interest rate payments.

A servicer deciding between a foreclosure and a loan modification faces the prospect of near certain loss if the loan is modified, and no penalty, but potential profit, if the home is foreclosed."

The report says that financial incentives offered to these companies by the government to help homeowners avoid foreclosure do not equal the profits they make through foreclosure.

It suggested that changes must be made to encourage more loan modifications. The bottom line is these changes probably won't be made if it's going to cost the companies money.

visit us at http://www.tampanativeagents.com/home.asp