Companies:Citigroup Inc | Bank of America Corp | JPMorgan Chase and Co
Reuters | 08 Dec 2008 | 01:22 PM ET
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Recent data suggests that many borrowers who received help with mortgage modifications earlier this year tended to re-default on their payments, a top U.S. banking regulator said on Monday.
"The results, I confess, were somewhat surprising, and not in a good way," said John Dugan, head of the U.S. Office of the Comptroller of the Currency, in prepared remarks for a U.S. housing forum.
"Put simply, it shows that over half of mortgage modifications seemed not to be working after six months," he said.
In reality, I don't find this that surprising. If someone needs to work their re work their mortgage, it tells us the person was probably in an unaffordable home to begin with.
3 comments:
I think the last line of your posting sums up the problem in an excellent way.
I wonder if it would make more sense to rework mortgages held by people who are in good shape. For example, someone with a good payment history and a five year, or seven year ARM who will see resets in 2-4 years. Why not rework the ARM into a fixed rate mortgage, locking in a better rate and helping to create stability down the road since there won't be a reset. We still have 3 years of resets to higher rates for tons of loans. If a patient is bleeding to death out of multiple gun shot wounds, just pumping in more blood won't save the person - you have to patch the wounds too. If you can't patch them, you have to call the time of death, not prolong the inevitable, especially when there are other victims to attend to. Of course, preventing the actual shooting would save the most lives, but I think it is a bit late for that.
Citibank is offering refi's into fixed at under 5%. Anyone with an ARM better jump. BTW, refi's have skyrocketed in the last two weeks.
This is not the previous Anonymous
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