Rough Economy, Growing Inventory Create More Moral Hazard in Use of Foreclosure Alternatives
March 31, 2011
With the glut of foreclosures in the pipeline and more loans falling underwater, servicers, regulators and attorneys general trying to reach a servicing settlement are having a hard time finding solutions that are acceptable to all sides. Cash for keys, for example – a strategy in which the borrower is given a monetary incentive to vacate the home – is no longer considered a particularly viable option. In fact, Sheila Bair, chairman of the Federal Deposit Insurance Corp., recently brought up the idea during a meeting with servicers, suggesting that...