Foreclosure Insanity

Mr. and  Mrs. Miller bought a home twelve years ago for $250 thousand.  In addition to their down-payment, they made payments for 12 years and now as a result of the housing crisis their home has a market value of $120 thousand. Unfortunately for Mr. and Mrs Miller, they cannot continue to make the payments on a home that has lost half of its value. The Millers contact the bank in hopes of refinancing their home based on the current market price of $120 thousand. The bank refuses and forecloses on the property. The Millers are forced to move into an apartment, and the bank sells the property to an investor for $120 thousand. The question is: why does the bank spend money on a foreclosure and the cost of reselling the house when they could have avoided those costs and refinanced the house to the Millers who had already made a down-payment and had an established record of making payments for 12 years. And, of course, the bank would have charged the Millers the cost of refinancing.


The above example is similar to situation in Florida, but one could find similar examples in most counties in the country.


And this insanity follows on the heals of the revelations about "robo-foreclosures" by financial institutions.


And these institutions are spending millions of dollars to lobby Congress in order to the prevent regulation. The Millers, on the other hand, cannot lobby Congress and end up losing their home.