Are banks trying to punish delinquent homeowners?

Editor,

In my experience, lenders are forgiving 50 percent, and sometimes more, of delinquent mortgage principals in the short sale procedure. The banks then have to pay closing costs on the short sale. The owners have to move out, and a new owner takes over at the reduced price.

All of this seems very unnecessary, and a cynical person might say that it is done to punish the delinquent owners. If the bank is going to reduce the principal owed by 50 percent or more anyway, why not instead modify the existing loan, reduce the monthly payments and allow the present owner to stay in the property.

A win/win all round and no closing cost expenses for the bank?

Michael G. Eastoe
Florida Worldwide
Sarasota