I spoke with a long-time REO listing agent this week who agreed completely with my theory that banks have stopped foreclosing.
Banks like Wells Fargo keep laying off workers:
The latest round of layoffs is “the result of continuing market changes, including improvements in delinquency and foreclosure rates and reduced demand for mortgage financing,” said Wells Fargo spokeswoman Mariana Phipps in Oakland.
But the improvements in delinquency and foreclosure rates are due to the banks not pursuing foreclosures. My friend mentioned how hard it is to get several owners of mortgage tranches to agree on principal reductions and loan modifications, and instead the servicers just let defaulters ride.
The accounting standards were suspended long ago and Helicopter Ben said himself that he told the banks to not do anything to harm the economy – so not foreclosing is a great solution. Banks can then cite the ‘improvements’, and layoff workers to pump earnings further.
No foreclosures = everyone is happy!