Troubled borrowers continue to default at high rates even on home loans that have been modified by lenders, according to a government report issued today. The report also found that an increasing number of borrowers default on their loans before making a single payment.
The report by the Office of Thrift Supervision and the Comptroller of the Currency, which regulate mortgage lenders, focuses on the effectiveness of industry efforts to help troubled borrowers. It finds that a growing number of homeowners are falling behind on their payments and that borrowers with prime mortgages, which traditionally are considered less risky, are a growing part of the problem.
"It’s higher than we have ever seen it, historically, and the fact that it is still climbing is something we are keeping an eye on," said John C. Dugan, comptroller of the currency. The report covers two-thirds of the mortgage market.
Modifications do not appear to be helping most of the recipients:
Despite increasing government and industry efforts, many borrowers are quickly falling behind on their payments after receiving a modified loan, which can include lowering their interest rate or extending the length of their loans. Of the loans modified early last year, for example, about 35 percent had missed at least three payments nine months after their loan was modified. About 57 percent had missed at least one payment.
Most borrowers, about 58 percent, received loan modifications that did not lower their monthly payments. The more a borrower’s payment is lowered, the more likely he or she is to stay current on a loan, the report found.
… there is plenty of pricing information on triple-A private RMBS and CMBS. They may not trade where banks holding lots of this paper at a loss wish they traded, but they do trade. Let’s get something clear, too — they NEVER traded with the kind of depth or frequency that Treasury, agency debt or Ginnie, Fannie and Freddie MBS do. Each bond is unique enough that it has to be manually evaluated — anything from a simple cash flow calculator that uses market conventions for prepayments and defaults – or elaborate option pricing models that take into account hundreds of different interest rate, credit performance and prepayment scenarios. The cash flow calculators are ubiquitous — the sophisticated tools are available at a market price. 
But politics may not have given the banks as much of a free ride as some think. This week Housing Doom really missed the late ÜberBlogger Doris Dungey (aka Tanta) who once graced Calculated Risk. She would have knocked a few heads together about the confusion over Fair Value Accounting discussions being held at the Financial Accounting Standards Board (FASB). However, Paul’s team at Housing Wire has a better handle on the issue than most of the MSM, with further discussion on their analysis (above ) available at CR. Markets are cheering the mainstream media’s impression that political pressure has caused FASB to abandon oversight on a wide range of assets held by financial institutions, but CR & HW are confident that the accounting standards folk are holding their ground.
Cenbanks bought a whopping $19.442 billion of treasuries and sold just a bit, $0.614 billion of agencies this week, for a total rise in US obligations of $18.828 billion. That’s almost $2.7 billion per day over the course of the week, but remember that the total buy over the whole previous 3 weeks had been less than $1 billion per week. Unless agencies buys return this Top 10 performance will have to recur for a few weeks if the cenbanks are to help finance the US bailouts.
The agencies line has now been almost perfectly flat for 11 weeks, but the treasuries line saw a bit of a pop.
Twist’s ratios graphs headed down a bit more, what with that big treasuries buy.
And Setser’s 52-week change graph saw some divergence returning.
For bloggers such as ourselves who rely heavily on the information of posters who prefer to remain anonymous, this is troubling news:
LAS VEGAS – A New Hampshire Superior Court Judge has ordered Implode-Explode Heavy Industries, Inc., the owner of the popular mortgage industry crash site Mortgage Lender Implode-O-Meter (ml-implode.com) to give up the identities of persons who provided information to the site about The Mortgage Specialists, Inc. of Plaistow New Hampshire.
Rockingham County Judge Kenneth R. McHugh also ordered that the allegedly "secret" and "defamatory" content about The Mortgage Specialists would have to stay down permanently.
The information consists of an anonymous posting on the ML-Implode forum about The Mortgage Specialists and the publishing of the company’s 2007 "Loan Chart" sent in by an informant and placed online by the Implode-O-Meter staff. [You can read the complete press release here.]