“Banks should be bending over backwards to help fix the mortgage lending crisis. It’s better to get 65% of your money back then 20% “
So we should politicize the process with local politicians beholden to the local electorate intruding on the contractual agreements made with national banks and investors so they can win favor with their electorate.Should you live in such a local jurisdiction, do you not think any bank with sense will not raise the level of mortgage rates in that jurisdiction to compensate for such onerous intrusion and perhaps redline the entire area refusing all future loans in the jurisdiction. I sure would if I did not want to guarantee loan losses in the loan portfolio.
No, you have it totally wrong.
Capitalism works both ways. You live and you die by the market.
In a natural market, under normal situations banks *should* foreclose and repossess as long as they continue to to see profit. But there is an X% point of defaults where it not only becomes unprofitable to do so, it actually accelerates their loss and actually drags other markets down with it (I.E Insurance, Bank deposits, Savings deposits).
Call it a Nash equalibrium.
Now, past that equalibrium they use the catastrophic secondary collapse as leverage against taxpayer to force the taxpayer to foot the bill on their loss, rather than taking the loss by writing down and ceding equity to the mortagees themselves.
In other words, they have a “I’m going to shit in the sandbox if you don’t play along with me” attitude.
Which of itself, politicizes the issue.