Mortgage Re-Defaults Are Ridiculously High
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According to new data from the Comptroller of the Currency, more than half of loans modified in the first quarter of 2008 fell delinquent within six months.
Comptroller John C. Dugan said, "After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent."
Mr. Dugan said the re-defaults are likely so high because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers, because consumers replaced lower mortgage payments with increased credit card debt, and mortgages were so badly underwritten that the borrowers simply could not afford them, even with reduced monthly payments.
With job losses mounting, these horrible numbers could get even worse.
Comptroller John C. Dugan said, "After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent."
Mr. Dugan said the re-defaults are likely so high because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers, because consumers replaced lower mortgage payments with increased credit card debt, and mortgages were so badly underwritten that the borrowers simply could not afford them, even with reduced monthly payments.
With job losses mounting, these horrible numbers could get even worse.
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