Quote:
Originally Posted by MRC123  Can somone help me understand why mortgage companies will take a short sale, but not write down our loan balances. Wouldn't it be less costly to just write down the principal of the loan and have the homeowner stay in the home rather than going the entire process of a short sale??? I don't get it.
Doesn't it end up being the same for them. They take the hit on the short sale. |
Because if they cut you a deal and writedown your loan, the floodgates will be open and they will be held hostage by every underwater borrower who has heard about it and has the backbone to gamble and stop payments.
With a shortsale they don't have the full costs of foreclosure, and you don't have quite the credit hit. It is a compromise and somewhat win win.