Posted September 15, 2018 05:25:04 The foreclosure crisis is wreaking havoc on the world’s economy.
But there’s one group of Americans who could stand to benefit from the crisis in some big way: loan servicers.
Lending is a key part of the American economy, so the more we know about it, the better equipped we are to help homeowners navigate the foreclosure process.
And now, a team of scientists is working to better understand how the industry is changing in response to the foreclosure crisis.
“The foreclosure crisis was one of the biggest shocks in the history of the financial system,” says James G. Burd, a professor of economics at the University of Minnesota and the author of The Big Short: How Wall Street Lost the Economy.
“I think that’s what the current crisis is really about.
It’s a reflection of how the system has fundamentally changed in the last few years.
It was a time when people were having their houses foreclosed, people were paying thousands of dollars to get their houses in order, and the government was making a lot of money on it.
And it just so happened that those same people that were doing well were also having their home foreclosed.”
It’s one of a growing number of studies that has been published in recent years, looking at how the foreclosure industry is shifting over the past decade or so.
“We have a lot more information now than we had a few years ago,” says Robert L. Wood, a senior fellow at the Urban Institute who has studied foreclosure trends.
“It’s one reason that there are a lot fewer foreclosures, because we have more data.”
In 2013, the Office of the Comptroller of the Currency released a report looking at the impact of the mortgage crisis on the U.S. economy.
The report found that the number of foreclosing banks rose from 10,800 in 2012 to almost 19,000 by 2017.
The number of loan servicer forecloses also increased from 7,400 in 2012, to nearly 20,000 in 2017.
Lenders who do the foreclosure work on the side, which is usually an industry that’s already had a financial crisis, are also having to worry about the next one.
The industry has had a tough time keeping up with the pace of the crisis.
In fact, in 2016, a federal government study found that banks in the United States were doing little to keep pace with their mortgage servicing needs.
“If you go to any lender, the most obvious thing is, ‘We’re in a foreclosure crisis, and we can’t get our mortgage payments done,'” says Wood.
“You have banks that have loans that are on hold, and you have loans on hold that are being serviced.
And there are other banks that are struggling to keep their balance sheets in order.
There’s a whole lot of work going on in this industry that hasn’t been fully accounted for.”
Burd says that even as foreclosure activity continues to rise, the industry needs to get more organized.
“A lot of what we’re seeing right now, and that’s a lot going on, is that the companies that are actually doing the foreclosed-lending are not doing a great job,” he says.
“They have a backlog of mortgage-related work that they need to do, and they need people to do that work, but they’re not putting in the time and the effort to actually do that.”
Borrowers, meanwhile, are having a hard time navigating the process.
“When people go to a lender, they’re being told they have to fill out a form and they’re supposed to give it to a company that will do it,” says Wood, who says that many borrowers end up filing for bankruptcy.
“And then you end up paying interest on the money, and then you have a default.”
That’s not a good look for a consumer.
“Loan servicers, and their agents, are not being very good at communicating that this is not a foreclosure, this is a loan,” says Burd.
“People are getting this false sense that this loan is being paid off.
It can take a year for a homeowner to get that money out of a foreclosure.”
That may sound harsh, but it’s true.
The average payment on a home forecloser’s loan is $3,700.
For many borrowers, that amount is just not enough to cover their bills.
And with many lenders offering less than half of what they originally promised, that’s an especially hard hit to borrowers who already had bad credit histories.
“These people are struggling just like everybody else,” says David Kupelian, a lawyer at the National Consumer Law Center who has been tracking foreclosers for years.
“That’s the problem: They have no recourse if they have a foreclosure.
And if they get a foreclosure and don’t pay the mortgage, the bank can still go after them.”
While Burd and Wood agree that