I noticed in the article that it said the loan servicers are the ones who benefit from the fees generated by delaying:
“Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are sold in foreclosure. The longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue – fees for insurance, appraisals, title searches and legal services….
Mortgage companies, some of which are affiliated with the nation’s largest banks, are paid to manage pools of loans owned by investors. Under their contracts, the companies typically collect a percentage of the value of the loans they service. They extract their share regardless of whether borrowers are current on their payments. Indeed, their percentage often increases on delinquent loans.
Legal experts said the opportunities for additional revenue in delinquency are considerable, confronting mortgage companies
with a conflict between their financial interest in harvesting fees and their responsibility to collect as much as they can
for investors who own most mortgages.”
In other words, the actual owners of the mortgages, who should be most interested in cleaning them up, are taking it in the shorts because the mortgages are actually being managed by others, who get off clean no matter what happens to the mortgages.
And then there is this bit of loveliness of which the mortgage originators are accused:
“Pratt, whose story we’ve been tracking, was “steered” into a sub-prime loan by Countrywide Financial. “Steering” is the polite term for forcing folk into crappy loan terms. And not just any folk: Black folk, like Pratt. Over 60% of African-American mortgage applicants were (and ARE) steered into “sub-prime” predatory loans.
According to exhaustive studies by the Federal Reserve Board and the Center for Responsible Lending (CRL), African Americans are 250% more likely to get a loan with an “exploding interest” clause than white borrowers – and notably, the higher the income and the better the credit rating of a Black borrower, the more likely the discrimination.”
