Banks delay foreclosures on delinquent loans because it’s in their best interest to do so. Many houses languish beneath excessive mortgage balances, and if lenders foreclosed on underwater delinquent borrowers, the lenders would lose a great deal of money. Even if the borrowers are current and want to sell the property in a short sale, lenders no longer approve those sales unless the borrower makes up for any shortfall because to accept less than the outstanding balance on the loan would also create a colossal loss.
The Dangerous Tipping Point in Favor of Foreclosure
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