More than half of U.S. borrowers who received loan modifications on delinquent mortgages defaulted again after nine months, according to a federal report.
The re-default rate of loans modified in the first quarter of 2009 was 51.5 percent by the end of the year, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a joint report today. The figure, which measures payments at least 30 days late, climbed to 57.9 percent for changes made in the prior 12 months.
U.S. homeowners are struggling to make payments as depressed housing prices leave them owing more than their properties are worth. About 24 percent of properties with a mortgage were underwater in the fourth quarter, First American CoreLogic said last month. The median price of a U.S. home was $165,100 in February, down 28 percent from its peak in July 2006, according to the National Association of Realtors.
Is this a surprise to anyone?
Now the administration is looking at requiring lenders to cut mortgage payments for the unemployed to no more than 31% of income. I googled and found that the average unemployment check is $293 per week (rounds to $1,270 per month). That works out to a mortgage payment of less than $400 per month. It’s a temporary measure but wow. If you lent someone $200,000 to buy a house, the payment would be about $1,200 per month (assuming a 6% interest rate for 30 years). Had the bank lent the money WITH NO INTEREST, the payment would have still been over $555 per month.
I wish the administration would concentrate on CREATING JOBS rather than trying to dictate private matters. You create jobs and all the rest of this stuff will take care of itself.