Restructured Mortgages See Lower Redefault Rates
According to the latest data, troubled homeowners are finding more success in restructuring their mortgages. The Wall Street Journal reports,
Some 18.7% of loans modified in the second quarter of 2009 were at least 60 days past due three months later, according to the report, by the Office of Comptroller of the Currency and the Office of Thrift Supervision. That compares with a redefault rate of 30% or more after three months for loans modified in the previous four quarters.
What has caused the improvement? Approximately 80% of loans restructured in the 2nd and 3rd quarters of 2009 resulted in lower monthly payments — helpful adjustments that weren’t being made in earlier quarters. The Obama administration, whose foreclosure-prevention strategy centers around affordibility, is encouraged to see that monthly payments have dropped an average of 35% for borrowers in the Obama program.
Despite the declining redefault rates, borrowers with good credit have been increasingly unable to pay their mortgages, resulting in more 3Q troubled loans.
For further information, visit WSJ.com.
