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Don’t tell Sheila Bair, but some delinquent mortgage borrowers don’t want their loans modified. They just want out:
"I have even begged them for a foreclosure," delinquent mortgage-holder Charlotte Jensen said. When she realized she couldn't save her Glen Allen home last year, she filed for bankruptcy, packed up her family and moved out. Nearly a year later, Bank of America has yet to take back the home.
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Jensen visits her home weekly to ensure it hasn't been vandalized or taken over by squatters. She pays landscapers to keep the lawn mowed. When the home caught fire in January, the police department knocked on the door of her new home, confused about whether to notify her or the bank. When neighbors complained about the mess left from the fire, Jensen returned to clean up.
One thing to be said in favor of foreclosure versus loan modification: It gives the borrower a better chance at a fresh start. He’s freed at last of his monthly nut, and can pack up and move his family someplace where, say, the job market’s better or the cost of living is lower. That’s not all bad. The foreclosure process is surely taking longer than normal this cycle compared to prior cycles, given the sheer scale of defaults occurring. But regulators’ insistence that lenders try to modify delinquent loans prior to pursuing foreclosure is taking an already-extended process and delaying it even further, for the sake of benefits that are, from what I can see, largely imaginary. . . . . Christopher Thornberg is still right. . . .As they used to say during another big crisis a few years ago, it’s time to move on. . . .
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