| Because a consumer accepts all the repayment responsibility of a loan, there is only one final outcome of failure - the foreclosure process. But no one should imagine that lenders want to actually take possession of a home that has been through this process. You might wonder what condition it would be in or how ill maintained it was, and the next step would be to sell it. This is not necessarily the best solution. This process illustrates the basic problem in the mortgage market. Because borrowers cannot distribute risk, they are liable completely; lenders on the other hand are much better at distributing risk through all sorts of note trading, selling, or group purchasing of obligations. The real problem comes with the customer losing their home and the lender assuming control of the residence. Both are problems that will work against any economic recovery process. Where you would think a negotiation process could minimize some of these problems, the lien holder is not the local bank, but usually one of the above group of investors or traders. These lenders do not have a direct route to deal with an individual customer to negotiate payment. I am not aware of any web companies that facilitate this process but you might imagine this would be quite an interesting business. Matching up groups of individuals who would like to distribute risk on both sides. By such a method not only could a reasonable business exist but also help to deal with general lending problems. It is assumed that this latest mortgage issue is new, but only the degree is noted. Every year people go through this process, and perhaps not even accompanied by an interest only loan.
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