A policy paper released last year by the Mortgage Bankers Association, an industry trade group, provides a useful summary of the significant costs borne by participants in the foreclosure process--with a focus on the lenders. While costs for individual loans vary widely, the paper cites research estimating that foreclosing a loan costs the lender nearly $60,000, on average. Other research estimates the cost to the lender somewhere between 30 and 60 percent of the outstanding loan balance.
Further reading:
Further reading:
Mortgage Bankers Association, Lenders’ Cost of Foreclosure, a policy paper prepared for the Congressional Education Series Briefing (May 28, 2008).
Darryl E. Getter, Understanding Mortgage Foreclosure: Recent Events, the Process, and Costs, Congressional Research Service Report for Congress (November 5, 2007).
Desiree Hatcher, Foreclosure Alternatives: A Case for Preserving Homeownership, Profitwise News and Views, published by the Federal Reserve Bank of Chicago (February 2006)
Karen M. Pence, Foreclosing on Opportunity: State Laws and Mortgage Credit, Board of Governors of the Federal Reserve System (May 13, 2003)
Amy Crews Cutts and Richard K. Green, Innovative Servicing Technology: Smart Enough to Keep People in Their Houses?, Freddie Mac Working Paper #04-03 (July 2004).
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