John X had his home foreclosed this year. It cost the investor who held the mortgage about $40,000 to foreclose. It would have cost only $25,000 to make the mortgage affordable to the borrower through a reduction in the interest rate. Modifying the loan contract in this way would have kept X in his home and saved the investor money. This is not an isolated case; preventable foreclosures are happening all around us. Note that I am using a cold-blooded business, not a bleeding-heart definition of "needless foreclosure." Under my definition, if it costs an investor more to foreclose a mortgage than to make it viable, it is a needless foreclosure. I am not counting the additional human toll exacted by foreclosures, which can be very high. Mortgage contracts are modified, a...
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