How Banks Change in a Recession
By Raymond V. Gessel | Published on August 9, 2011 | 0 Comments
Working in the realm of real estate law in Kent, WA, Raymond V. Gessel, Attorney at Law, has seen some fascinating transformations in what most would certainly consider a bitter economic period. The overriding development is this: Whereas banks used to prefer going through with foreclosure when a homeowner couldn’t pay a mortgage, now banks are willing to work with debtors because banks, too, need the money. That’s a significant shift, as even banks are being brought to the level of their debtors. As Gessel shows, that change in viewpoint is necessary for banks’ survival in many ways.
When a homeowner can’t pay a mortgage, and the lending bank forecloses on a home, the bank is taking an extreme financial hit. In foreclosure, the homeowner loses a home, and the bank loses the debt it could have gathered from the mortgage—even if the mortgage were changed to allow for smaller payments over a longer period. These days, however, banks are not in a position to wave off the money and punish homeowners who can’t pay up. Banks are thirsting for cash to stay afloat. According to Gessel, banks and debtors are doing everything they’re allowed to under real estate law in Kent, WA, to make bankruptcy work mutually. That means the homeowner, who files for bankruptcy, can catch up with mortgage payments, so the lender—the bank—can start to get paid again on the debt. That means the bank—the creditor—will make much more money than if the house had gone into foreclosure.
Gessel says that banks definitely get the message the tough times are sending. Consequently, many lenders are bending over backward to accommodate debtors whose bankruptcies are allowing them to pay back their mortgages, albeit slowly. Gessel is working with a client homeowner right now in which this is the case. He says that a lender recently did everything in their power allowed by Kent, WA, real estate law to rewrite an entire loan for a debtor so the debtor could save their home. The debtor was extremely behind on mortgage payments, and these were big mortgage payments. So the lender wrote down the mortgage to the effect that the payments are manageable. They’re so manageable, in fact, that the debtor is now current with the loan payments.
In an ailing economy, what’s happening with Kent, WA, real estate law is that lenders—who used to operate as powerful and more important than debtors—are being brought down to earth. Lenders realize that if they don’t start to work WITH instead of AGAINST their borrowers, they won’t last financially, either.
*Disclaimer: This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.