High rate of default on modified loans for homeowners
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Mortgage modifications are apparently only delaying the inevitable for more than half of the homeowners who received them. Reports at CNBC.com and the Calculated Risk blog Monday look at the numbers. From CNBC:
Recent data suggests that many borrowers who received help with mortgage modifications earlier this year tended to re-default on their payments, a top U.S. banking regulator said on Monday. ‘The results, I confess, were somewhat surprising, and not in a good way,’ said John Dugan, head of the U.S. Office of the Comptroller of the Currency, in prepared remarks for a U.S. housing forum.
More from the Calculated Risk press release:
“After three months, nearly 36% of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53%, and after eight months, 58%,†the Comptroller said....
As to why:
That question “has important ramifications for the foreclosure crisis and how policymakers should address loan modifications, as they surely will in the coming weeks and months,†the Comptroller added.
If the experts don’t know why, we’re all in trouble. It’s no doubt a lot of reasons. One possible big reason for Southland homeowners: Even with the modified loan the houses aren’t worth the balance, and people have decided to get out from under the debt.
-- Lauren Beale
Thoughts? Comments?
