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“Banks don’t want to acknowledge losses,” she said. “They need staff. And there’s fear of redefault risk,” since about 40 percent of loans that are modified end up back in default, she said.
Perhaps the biggest obstacle to resolving delinquent mortgages has been persuading investors who purchased the loans to go along, since many of them would benefit more from letting the bank foreclose on the loans rather than modifying them and reducing the monthly payments, she said.
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