Lenders Are Adjusting 10% Of Loans

Lenders are forgiving homeowner debt 10% of the time – according to the report from April to June.

Usually this was done by lenders modifying a home loan to make it more affordable for the homeowner. This is more than triple the amount of loan modifications done in the first quarter.

In general debt forgiveness is rare because banks are forced to record the loss in its books and runs the risk that the borrower will default again. Banks are also often worried that borrowers who can afford to make payments may default in the hopes of having their payments reduced.

Many say that the new forgiveness the banks are having is in part due to the Obama Administration’s loan modification program that offers cash payments to companies that successfully modify loans and reduce debt.