lol...it's the borrower, stupid, oh and the crashing house price
Modified mortgages re-defaulting at high rates
Miami
WASHINGTON (MarketWatch) -- More than half of mortgages modified in the first quarter were at least 30 days delinquent after half a year, and it's necessary to figure out why so many modifications are not having the effect of preventing re-defaults, regulators said Monday.
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.
Telling details
During the third quarter of 2008, delinquency increased in all loan categories -- prime, Alt-A and subprime -- with the percentage of mortgages that were current and performing falling to 91.47% at the end of the September, down from 93.33% at the end of the first quarter.
"Delinquencies continue to rise, foreclosures and other actions leading to home forfeiture also continued to rise, and loan modifications were associated with high levels of re-default," the report concluded.
The report focused on 35 million first-lien mortgages, worth more than $6.1 trillion and constituting more than 60% percent of all outstanding mortgages in the United States, held or serviced by national banks and thrifts.
Newly initiated foreclosures declined 2.6% in the third quarter from the second quarter. New loan modifications rose 16% in the third quarter to more than 133,000, according to the report. Newly initiated home-retention actions -- loan modifications and payment plans -- also rose, up 13% in the third quarter.
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