OK so my brilliant little theory is actually not a theory, but an actual FINANCIAL PLAN.
So this is how it works. There are actually 2 parts to it.
1. There are people who have already fallen behind (the borrowers who have stopped paying.)
2. There are the people who are on the verge of falling behind (these are are still currant.)
Now the banks know about the ones who have fallen behind, but their harassing phone calls and letters cannot seem to get these people to pay. So what will get these people to pay? The MAKING HOME AFFORDABLE BIG FAT AMERICAN LIE!
They don't know about the ones who are about to stop paying, but lucky for the banks, the MAKING HOME AFFORDABLE BIG FAT AMERICAN LIE will solicit the homeowners who are in danger of falling behind.
All they have to do to make this work is actually modify about 1-5% of these loans. THAT'S IT. ITS THAT SIMPLE! Again Lucky for the big banks, when people are so distracted by silly things like how to come up with money for food and utilities, its hard for them to focus. So they can easily be tricked! They are so desperate to feed their families,(its funny to us bankers really,) they will actually fall for a ruse this obvious.
So once we get them to START PAYING OR KEEP PAYING.. ( we don't know how they are coming up with the money now, if they couldn't before... oh maybe they are borrowing from family or friends by telling them that they are saving their homes! Maybe they are cutting down on food, the are probably too fat anyway... who cares where they get it, that's not our problem.) we start foreclosure, simultaneously. Its called DUAL TRACKING. Most of the time they don't even know what's going on because we keep sending out this silly little notices saying you are in a HAMP trial modification. We even have service representatives telling them to ignore those silly little foreclosure letters. Most of the time it works, they ignore them...
When they finally realize what has happened, we are very close to foreclosure. WOW look how much money we saved doing it this way! Its GENIUS!
Thanks MAKING HOME AFFORDABLE! WE DON'T OWE YOU!