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Lenders Not Negotiating Much on Loan Mods

With all the government efforts and initiatives in place, why is it that Bostonians are still foreclosing?

It's a legitimate question-- and one that leaves many Boston real estate lawyers scratching their heads.

I've mentioned on this blog that foreclosures went up. This was despite the fact that the Federal First Time Homebuyer Tax Credit was also boosting home sales.

But then, who ever said that home sales needed to be inversely correlated to foreclosure? That's certainly not the logic of many lenders, who felt the urge to foreclose on homes so that they could benefit from the buying frenzy initiated by the tax credit.

Another noteworthy item is the fact that the Obama Administration's home loan modification plans and foreclosure prevention initiatives weren't always mandatory for lenders. They didn't necessarily place an impetus on lenders. Rather, they were voluntary. As a result, MA real estate lawyer Paul Collier thinks that these initiatives were largely unsuccessful. 

What's worse is that many Massachusetts homeowners are underwater, with no home equity. As such, it's not uncommon for underwater homeowners to contemplate walking away from their mortgage. Especially given the fact that banks are not willing to work with these distressed homeowners, according to Lisa Vinikoor of the Merrimack Valley Project.

It's very hard for the Obama Administration to come up with a scheme that will work for both the distressed homeowners and for the lending institutions. It is known that the banking lobbyists work long and hard on Capitol Hill to have their voices heard. But their voices sometimes come at the expense of the voices of the little guys on Main Street.

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