Loan changes don’t save all homes
As lawmakers and housing advocates push the federal government to help cut the foreclosure rate, Comptroller of the Currency John C. Dugan offers this sobering statistic: More than half of loans modified in the first quarter of 2008 still fell delinquent within six months.
Dugan, whose agency regulates national banks, used data collected from institutions that service more than 60 percent of all first mortgages, or 35 million loans worth $6 trillion.
Experts say one possibility is that the modifications might not have lowered monthly payments enough to be truly affordable.
Bruce M. Sattin, a New Jersey lawyer who handles foreclosure cases, said most modifications required borrowers to continue their normal monthly payments and pay additional amounts each month to make up payments missed before the loan was altered health insurance.
"There are individuals for whom any loan modification would result in a mortgage payment they can’t afford, because they couldn’t really afford the original mortgage in the first place," said Farah Jiminez, executive director of Mt. Airy USA, a community development group.
"Trying to save the homes of those in such arrangements may only be prolonging the pain — especially for the homeowner," she said.