Most people think that when a loan modification fails, then the homeowner who loses their home is the only party that loses. Well, often the bank loses as well. Many banks are turning down loan modifications where the payments received would repay a mortgage amount higher than what they sell the property for as a foreclosure. 

A bank has two options when negotiating a loan modification.

Option 1: Foreclose and sell the property for $150,000.
Option 2: The homeowner is offering to repay $1,000 a month for the next 30 years. At today's interest rates that will repay a $211,000 mortgage.

In fact, these same banks are spending thousands of dollars advertising to get people to borrow $211,000 and repay them $1,000 a month. But, in most cases they would rather foreclose and kick this homeowner out of their home. This makes the bank a loser on two counts. First, they are losing money. But, second of all, they are a loser for unnecessarily kicking a family out of their home. 

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