"" banks will say they can't do a modification on Moral grounds."" Pure fiction. Do you even know who these "banks" are? As far as first position home loans go, Wells is primarily a mortgage originator and servicer. Over 90% of the loans Wells services belong to GSEs and private investors not Wells Fargo. Ultimately the GSE's and private investors on the hook for the loss, decide which loans will qualify for mods or Short sales. In case you don't know the acronym GSE, here's a clue. G stands for Government.
I suppose what you are proposing is to give people loan moadificaionts even if they dont qualify for one. Investorzzo, you need to understand that giving someone a fress start even though they cant afford the fresh start is predatorial!!! You've got it backwards. If someone cant afford the lowered payments, but is given the mod anyway so that they can make pmts on it with their credit card or borrowing from relatives then winds up losing the house in foreclosure anyway... whats the use of taking their money?
Next you said: <<<As long as the banks can keep you off their loss lists, they can keep the illusion of losses to a minimum.>>> Investorzzo, even if there is no sheriff sale the bank must still show it as a non-performing asset and thus provide reserves (provision for loan losses). Loan loss reserves reduce their GAAP earnings which you mistakenly think they can accomplish by not going through with the sale. But GAAP earnings are for investor purposes, not the IRS. My understanding is that you cannot lower your income by provisioning for loan losses, therefore by not foreclosing on the home it reduces the GAAP income but increases the income they must pay taxes on to the govt. So any idea of witholding forclosure sales because it gives off some beneficial illusion is totally conjured up by arm chair bank analysts that believe in rationalising lenders motives to what their actions are.
It doesnt provide an illussion of increased profitability when its NPA' include the figure! WFC has over $2B in REO' they are looking to sell, just because they are unwillinig to sell them for less than they think they can get for them in the future is not something that is devious!