Bowing to government pressure, lenders have been modifying loans. Modifications appear to only be delaying the inevitable: [Thanks L!]
The proportion of modified loans delinquent by 30 days or more was 55% after six months, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Modified loans that were 30 or more days delinquent after three months stood at 37%, the agencies’ data showed."One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months and even eight months," said Comptroller of the Currency John Dugan."This trend of increasing delinquencies underscores the need to understand why these modifications have not been more sustainable," he said in a statement.The proportion of loans modified in the first quarter that were 60 or more days delinquent was nearly 37% after six months, and 19% at three months.
Loan modifications don’t solve the real problem- people either can’t or won’t pay for overpriced real estate. Prices need to fall to more affordable levels, and borrowers need to be in a more stable financial position. It’s hard to modify a loan to fit the needs of people who have lost their jobs.
Mofidications in general aren’t working. It’s too bad the goverrnment doesn’t give lenders and the market a chance to do what needs to be done. Instead of greasing the wheels of the housing industry- they just keep shoving sticks in the spokes.
The mantra of 2009 will be:
“It isn’t housing, it’s jobs.”
i read this article this morning and thought to myself “wow….who’d have ever thought that this wouldn’t work?” it stands to reason that if you couldn’t afford, let’s say $1500/mo, then you probably can’t afford, let’s say $1300/mo. I have a couple clients who have done these and they worked. the client stayed in the house and the modification was large enough to matter. however, most that i’ve seen that would qualify for the modification, don’t want it because they are too far upside down. they don’t want a temporary rate cut…..they’d prefer a 20-30% cut on the balance and they aren’t gettin it so they are still walkin away.
Most loans made in the last five years do not include a down payment. If people were require to put down at least 20%, then most people would not be walking away.
This is so frustrating. Even a dummy like me knew this couldn’t work. Like AZ said if they can’t afford $1500 they probably can’t afford $1300. A tea party is so needed. Igor is mad as hell and……..