Mortgage Modifications a Bust?

We have previously written about the failure of mortgage modification programs in the current economic crisis. See our post of December 10, 2008, Foreclosure Follies: A rebuttal to the FDIC modification plan. In our post we pointed out that the FDIC's prediction of a 15% or so failure rate when loans are modified was too low. Now, the Comptroller of the Currency is weighing in with a 50% figure. See, Second time no charm for homeowners appearing through the Washington Post wire service.

To answer the question why so many modified loans are failing is not easy. Could it be

• Loss of job?
• The type of modification, e.g. is the rate lowered or is the arrearage merely spread out?
• A feeling of helplessness when the home is worth less than the mortgage?

Some are concerned that a focus on re-default rates could discourage loan modifications. "That data just makes me wonder what kind of modifications those national banks and thrifts are doing. Were they sustainable?" said Mark Pearce, North Carolina's deputy commissioner of banks and a member of the State
Foreclosure Prevention Working Group.

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220. Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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