Mortgage Mods Unlikely to Stick

Most borrowers whose loans are modified under federal programs will likely default within a year, Fitch Ratings forecasts.

Among those mortgages modified without backing by a federal agency, the foreclosure rate within a year is likely to be 65 percent to 75 percent.

Fitch based its predictions on the performance of loans modified in the first quarter of 2009.

Fitch Managing Director Diane Pendley says the failure rate is likely to be high because borrowers are saddled with credit-card debt, car loans, and other obligations they can’t afford.

Source: The Wall Street Journal, James R. Hagerty (06/16/2010)