According to a study done by the Office of Thrift Supervision, more than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again.
This opens an interesting discussion: Will a borrower that has already been in serious default stay current just because the payment has been lowered by $100, or the arrearages have been deferred to the back of his loan? The bulk of loan modifications don't actually provide much financial relief for borrowers & there is a psychological barrier of going into default that once broken is much easier to break again.
Currently only about 5% of requested modifications are even approved & lenders are in a tough spot determining whether or not a borrower will stay current if they modify the terms of a mortgage.
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