A new reports indicates that efforts to aid homeowners facing foreclosure aren’t working:
WASHINGTON (Reuters) – 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.
“Put simply, it shows that over half of mortgage modifications seemed not to be working after six months,” he said.
Dugan said based on data collected from some of the biggest U.S. institutions, like Bank of America, Citibank and JPMorgan Chase, home foreclosure starts fell 2.6 percent in the three months ended in September.
However, data which is to be issued by the OCC and the Office of Thrift Supervision (OTS) next week could throw cold water on a push by some U.S. policymakers for loan modifications as the key remedy for the ailing U.S. financial and economic crisis.
Dugan said recent data showed that after three months, nearly 36 percent of borrowers who received restructured mortgages in the first quarter re-defaulted.
The rate of re-default jumped to about 53 percent after six months and 58 percent after eight months, Dugan said, without providing an explanation for the trend.
All of this indicates that this isn’t just a matter of mortgages with unfavorable terms, some people just aren’t able to afford the homes they’re living in, and no government program is going to get around that fact.
December 10th, 2008 at 10:26 pm
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