After the market crash of 2008, 2.6 million Americans lost their jobs, and 1.2 million properties were foreclosed in 2009 due to the recession. As a result, many of the mortgage lenders that accepted the government bail-out money were forced to offer loan modification assistance programs to help homeowners catch up on their mortgage arrears in an effort to avoid foreclosure.
Mortgage lenders to the rescue, right? Unfortunately, oftentimes theories don’t work as well in practice. The influx of loan modification applications inundated the offices of ill-prepared and understaffed mortgage lenders, causing most applications to be denied or overlooked without even being properly reviewed. The failure of these loan modification programs, coupled with loan modification scams, only perpetuated the increasing foreclosure rates. But Why?