In the first half of this year, borrowers defaulted on modified mortgages at rates higher than almost every estimate. According to the Office of Comptroller of the Currency statistics released today, 36% of borrowers who had their loans modified in the first two quarters of 2008 re-defaulted after just 3 months. After six months, the redefault rate was roughly 56%. After eight months, 58% of borrowers re-defaulted.
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The aggregate doesn’t tell the whole story: I am personally aware of at least 2 cases of loan modifications that changed the note structure from an ARM to a conventional 30 year but had a net monthly payment decrease of only $150 or less on $3k. So both of those notes were modified, but neither of them were helpful, and both of them were setup for failure. BTW, I have no idea if there were any re-defaults on these. Needs to be bucketed by size of monthly payment and sliced by percentage reduction to get a better story. Ouch! Borrowers Keep Defaulting After Mortgage Modification: Tech Ticker, Yahoo! Finance (via wiesen) Not a good sign. (via mikehudack) |
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The aggregate doesn’t tell the whole story: I am personally aware of at least 2 cases of loan modifications that changed...
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