Why Don't Mortgage Companies Refinance?

Instead of foreclosing on all of those sub-prime loans, why don't mortgage companies just refinance the sub-prime loans into fixed-rate mortgages and keep money coming in, instead of losing it?

Update:

You know, I really don't care if it's the Bank's fault for issuing mortgages they knew the borrowers couldn't afford, or the borrower's fault for taking out mortgages they knew they couldn't pay. All I am asking is, doesn't it make more sense for the Economy to work out terms that allow the borrowers to still make payments, rather than the banks losing all of that money, and the borrowers losing their homes?

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  • 1 decade ago
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    You are working under the assumption that the problem in the ARM (Adjustable Rate Mortgage) and not the borrower. The reality is that in most cases the borrower is the problem. Changing the type of loan doesn't change this. The truth is that a lot of people were given home loans that should not have been given them. Mortgage companies are now realizing this. It makes sense for them to cut their losses, as heartless as that may seem.

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  • Anonymous
    1 decade ago

    unfortunatly the real logic doesn't work in mortgage companies.

    most subprime notes were to folks who shouldn't have bought becasue they diin't have the money or knowledge to keep money.

    so they don't qualify under normal rules.

    banks are stupid in their rules sometimes.

    Source(s): foreclosure server, too much work tooo come
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  • Anonymous
    1 decade ago

    Look at it this way. If you knew a package had a bomb in it would you buy it? The fact is if you make a bad decision, who lives with it? You do.

    Source(s): Realtor/Appraiser-MN
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