Free Republic

As I discussed at the American Action Forum with Douglas Holtz-Eakin, Jared Bernstein and Jason Gold, there are 14 Administration mortgage modification programs (including the Attorneys General Settlement). And the Administration keeps insisting on MORE programs such as principal reductions and HARP 2.0 Supersized! The Administration is even ADVERTISING their refinancing programs. Of course, the last line is absolutely false. SOMEONE pays for loan modifications and principal reductions and those people are investors such as banks, Fannie Mae, Freddie Mac, pension funds (yes, even Clark Griswold will have to pay for Cousin Eddie’s loan modification and principal reduction). In order...

Rising Redefaults Could Prompt More Principal Reductions By: Carrie Bay 01/26/2010 Despite the income verifications and trial modification periods being carried out by mortgage servicers, modified loans continue to redefault at extremely high rates. The debt ratings agency DBRS estimates that more than half of all restructured mortgages are at least two months delinquent or fall into foreclosure again within six months of modification. As a result, DBRS expects modifications that forgive mortgage debt to become the preferred loss mitigation strategy for many servicers during 2010, according to notes released Monday by the Toronto-based agency’s New York office.

Monday, December 22, 2008 Redefault Rate on Mortgage Mods 55% Within Six Months Proponents of mortgage modifications contend that the cost of even a deep principal reduction still puts the lender ahead of foreclosure, and experience in past real estate downturns would bear that contention out. So why is this time different? Data from the Office of the Comptroller of the Currency show that 55% of mortgage mods redefault within six months. Even more discouraging, the three month re-default rate was higher for loans modified in the second quarter of 2008 than the first. It is hard to know for...