Why banks are renegotiating mortgages.
As if this hasn’t been said a thousand times already…
The reason banks are willing to renegotiate rather than foreclose is simple:
The housing market has collapsed. It’s not on it’s way, it’s not teetering. It’s done. Stick a fork in it.
The whole thing is right out of Econ 101. Artificially heightened demand leads to overproduction, which leads to increased inventory, which leads to a collapse in prices when supply outstrips demand.
So the very last thing any bank (that wants to remain in business) wants to do is find itself holding properties. Especially distressed ones (which many foreclosures are).
The doctrine of “half of something is better than all of nothing” applies.