Thrift regulator releases study on success rate of reworked loans WASHINGTON (MarketWatch) - More than half of all modified mortgages defaulted again within six months, a top banking regulator testified on Tuesday. A study looking at loans that were modified in the first three months of 2008 showed that 37% of borrowers were more than 30 days behind on their payment within three months, and 55% had re-defaulted within six months¸ said Grovetta Gardineer, a managing director at the Office of Thrift Supervision, which conducted the study. The statistics echoed the results of a similar report released last year by the Office of Comptroller of the Currency that also showed a similar high level of re-defaults on modified mortgages. Gardineer described details of a "mortgage metrics" report at a House Financial Services Committee hearing on Capitol Hill. The testimony about the success rate for loan modifications comes a week after President Barack Obama announced a more ambitious plan costing some $75 billion to help homeowners refinance or modify their loans before they have technically defaulted. See full story. That plan seeks to use government funds to encourage private mortgage investors and other lenders to modify mortgages for troubled homeowners who are still current on their payments. The government hopes it can help up to 9 million homeowners avoid default or foreclosure. The plan also seeks to help other borrowers that owe more than 80% of the value of their homes to refinance high-cost mortgages into ones that have lower interest rates. In many cases, borrowers in these circumstances owe more than their homes are worth and otherwise wouldn't be able to refinance. It's unclear whether the Obama approach will reduce the number of homeowners who re-default on mortgages modified as part of the progra http://www.marketwatch.com/news/sto...x?guid={D08D446A-152D-4E5E-8639-0814278C8945}
Nope. People buying way above their means, I'm talking about living like millionaires on minimum wage salaries. Credit is gone, so their means of supporting their lifestyle is gone too.
If they couldn't afford it before, what's to think after "modifying" they'll be able to afford it now? Just delaying (and spreading out a bit) the inevitable...