I think we know that lenders want to avoid foreclosure at all costs. I’m wondering if they would be more motivated to recover their capital quickly from a loan that is locked in at 3%, so that they can deploy that capital into a market rate loan, and thus earn more interest.
I’m not in danger of foreclosure, I’ve just always been curious about this since rates increased.
No, pay your mortgage
No. Not at all.
No lenders dont care about the rate. They get paid a fee to accept your payment and do all the things associated. There is actually more value in that lower rate loan that won’t pay off as quickly
No. Most lenders don’t keep loans on their books long enough for this to matter. They sell them to investors or to the GSEs who pool them in mortgage-backed securities. The servicing agreement outlines the loss mitigation steps the servicer must take while working on behalf of the investor or the securitization. I work in the industry and have never seen an agreement that has any sort of provision like this. Foreclosure timelines are also heavily dependent on location.
Mortgage lenders are not house flippers, they’d rather you pay your mortgage or modify the loan than take your house. They don’t want houses.
My guess is no. The original lenders very rarely hold the paper. Nearly all mortgages are securitized as mortgage backed securities and the originators just handle the paperwork on payment flows and have to pursue foreclosures per their agreements.
Foreclosure is foreclosure pay your bills
Lenders want to get paid on time. They don’t want to worry about foreclosure at all. This isn’t a get rich quick scheme for lenders. Just pay your bills.
Dunno. Wish we could see inside the black box!
I’ve never been involved in the process professionally but I know banks were keenly focused on execution when clearing their inventory after the financial crisis. They waited to foreclose if the house was being taken care of and were methodical about not tanking prices by dumping too many homes onto thinly traded markets. The marketability of your home (on a spreadsheet perspective) is probably the primary factor.
Most banks aren’t even keeping the risk anymore. They’re selling the loan to the taxpayer and profiting from origination fees plus servicing.
There are so many state and federal timelines that must be observed in a foreclosure. That is what drives timing, not interest rates. Most loans are sold/securitized and the lender was paid at origination. The servicer doesn’t get paid based on rate at all, but if they screw up a timeline it’s a problem.