On the whole re-write issue, wouldn’t the old contract or mortgage need to be set-aside and a new mortgage recorded? I don’t know the mechanics of the process intimately but it seems like thats more of a story than a reality. The bank just lops off money you owe them? It may be practical, but it seems like there would be a huge paper trail. A paper trail that would have county recorded tie-ins.
As a second issue I don’t think it matters that much. All the bank is doing is recognizing market value such as it is today and adjusting what you owe accordingly. They wouldn’t be doing this is they thought that by selling the property after a foreclosure they would get more or even the same on the open market. It sounds distasteful, because it rewards the risky behavior we on this site abhor, but its still a form of market price discovery.
Is there any way to get more information on this practice?
