More than 50 percent of home loans modified under foreclosure prevention programs during the first and second quarters of 2008 have become delinquent again, after a period of just six months. As explained by U.S. Comptroller John Dugan, the modified loans reached $6 trillion, about 60 percent of all primary home mortgages in the U.S.
At a national conference on housing, Dugan said that his office will ask mortgage servicers to provide more information on the loans and why borrowers defaulted again. The reasons for the high rate of repeat delinquencies, he said, must be examined because a lot of government officials are calling for the use of loan modifications to help solve the foreclosure crisis.
Among the organizations that offered loan modification schemes is the Hope Now Alliance, which is a group of servicers, investors, lenders and counselors assisting troubled homeowners in negotiating repayment plans.
According to the Mortgage Bankers Association, there are about 1.35 million foreclosed homes as of November and the number of homeowners in danger of foreclosure has increased by nearly 7 percent.
Meanwhile, Federal Deposit Insurance Corporation Chairperson Sheila Bair claimed that the redefault rate had been high because the first loan modifications offered superficial loan changes. What Bair had been proposing to avert further foreclosures is a loan modification scheme that reduces monthly payments to about one-third of a homeowner’s gross monthly income.
Bair explained that the monthly payment reduction can be achieved by one or all of three ways: reduction of interest rates to about 3 percent, extension of the loan term to 40 years or deferral of principal payments.
Massachusetts Representative Barney Frank, chairman of the House Financial Services Committee, stated that the U.S. Congress will not release the second half of the $700 billion foreclosure prevention package to the administration of President George Bush unless the money will be spent to administer loan modifications.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.
Notice: In accordance with FTC guidelines, we state that RealEstateProArticles.com has financial relationships with some companies and may be compensated if consumers choose to buy, subscribe or take any action to a product or service via the links on our website. Occasionally, we receive free access to review a product or service. We do not accept compensation in exchange for a positive review. These reviews are strictly the opinions of the author.
![[Valid RSS feed]](http://www.realestateproarticles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites