25% of Borrowers Who Received Mortgage Payment Reductions Fell Behind Again

For every four borrowers that received a mortgage payment reduction, one ended up falling behind again.

Okay, I guess the optimistic way to state that would be to say that the mortgage payment reduction program has had a 75% success rate (still that’s a “C” if you were using a grading scale). There’s also no guarantee that more recipients won’t fall behind. I think we would have been better off to just let the market work this mess out and allowed those who couldn’t afford their homes to move on with their lives instead of dragging this mess out longer.

The good thing we can take from the article mentioned above is that the housing market appears to be stabilizing. Let’s just hope that unemployment doesn’t hinder a recovery.

4 thoughts on “25% of Borrowers Who Received Mortgage Payment Reductions Fell Behind Again”

  1. That statistic isn't surprising. Most people fall behind on their mortgage or go into foreclosure due to divorce, medical, or layoffs. The media would have you believe it is those evil banks and mortgage brokers and their predatory loans though. Continued problems paying the mortgage even after the mortgage had been modified is directly related to the fact that these borrowers are in trouble due to curtailment of income. No money coming in or savings? Can't pay the mortgage. It really is that simple.

  2. Russ,

    I'm not excusing the horrendous practices of more than a few mortgage brokers who used the excuse of, "Oh well, if I don't do this they'll only go down the street to some other mortgage broker…"

    My point of this post is that the bailouts had limited success because they "helped" people who really couldn't afford the house in the first place. They only prolonged the inevitable.

  3. My SIL is the perfect example. She had an ARM that reset and she couldn't afford the payments. No let me rephrase that. She chose not to make it a priority and decided not to pay it. So, she was a couple months late and then Countrywide decided that it would change it to a lower interest rate to help her out. Well, guess what. She fell behind again even at the lower rate. She makes 65K and her mortgage payment is less than $1K. Unfortunately she talks about it like its no big deal but we'll see what happens now since she has decided to sell the house. Does she seriously think she is going to get a mortgage? Why would anyone give her money? She needs to learn a lesson and if not being able to get another mortgage will teach her than then so be it.

  4. I would think the only real way of gauging the success or failure would be in estimating approximately how many of those 75% would have been able to pay their mortgages without a reduction and how many wouldn't. If most of them would have been able to catch up and pay, then there really wasn't much point. If they would have all defaulted and gone into foreclosure, then at least this way people are keeping their homes, mortgages are being paid off, banks are making money back, and the debt is less toxic.

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