If you thought that banks and the federal government were going to give up, think again.
Let’s say you are a distressed homeowner. Let’s say you have a hefty mortgage. Let’s also say that you are working with your bank on a loan modification. The chances are that one fine day you might receive a letter from a new owner of your mortgage and servicer. The letter will inform you that your mortgage was sold by your lender to a private equity firm and that a lawsuit is forthcoming, seeking to foreclose on your home. Right when the housing market was finally recovering, thousands of homeowners are now confronted with this new unfortunate chapter engineered by banks and by the federal government to deal with “underwater” mortgages: troubled loans are sold for a discount price at federal auctions to private equity firms, entities that are far more “creative” than banks in recovering from delinquent borrowers. Hence, the new breed of sharks. Continue reading