There are a number of reasons why your bank or lender wants to modify your loan but we have the top reasons listed here.

1. It cost the bank alot of money to foreclose a house
2. “Upside down” houses lose the bank even more money
3. Too many foreclosures ruin the banks assets and can cause them to fail as many have already.
4. An under performing asset is better than a worthless asset

I’m sure you remember all those crazy loans that banks were giving out a few years ago, those neg-am, and ARMS or adjustable rate mortgages.  Those loans were really profitable for the banks for a while but now they have turned out to be a nightmare for lenders because homeowners can no longer afford the monthly payment as they have adjusted upwards.

This is why they are trying to mitigate their losses that is why in most banks the department that does loan modifications is called the loss mitigation department.

This entry was posted on Friday, March 20th, 2009 at 2:25 am and is filed under Loan Modification. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.