More than 11 million properties with mortgages are “underwater,” according to First American CoreLogic. Efforts to expand use of principal forgiveness haven’t caught on.
Owners of bad loans are increasingly making deals with borrowers to avoid a foreclosure, which tends to reduce returns for investors and place a black mark on the homeowner’s credit. Lawmakers and regulators are becoming more accepting of these solutions even though they mean the borrower loses the home.
The trend comes after more than two years of loan modification programs and foreclosure moratoriums that have produced mixed results, with many homeowners ineligible or defaulting again.
