Homeowners who modified loans are in trouble again

[chanster]

WASHINGTON ? More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday.
The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency.
"I do have concerns about allocating federal resources" Reich said.
However, many experts claim the bulk of loan modifications don't actually provide much financial relief for borrowers.
The government's data don't include enough detail about the types of the loan modifications that were made, said Sheila Bair, chairman of the Federal Deposit Insurance Corp. "The quality of the (modifications) are not what they should be," she said.
The U.S. economic picture has darkened over the past month. One in 10 Americans with a mortgage is either behind or in foreclosure, and more than 500,000 jobs were lost in November.

 

[AAbsolute]

WASHINGTON ? More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday.
The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency.
"I do have concerns about allocating federal resources" Reich said.
However, many experts claim the bulk of loan modifications don't actually provide much financial relief for borrowers.
The government's data don't include enough detail about the types of the loan modifications that were made, said Sheila Bair, chairman of the Federal Deposit Insurance Corp. "The quality of the (modifications) are not what they should be," she said.
The U.S. economic picture has darkened over the past month. One in 10 Americans with a mortgage is either behind or in foreclosure, and more than 500,000 jobs were lost in November.

I'm sorry to see it, but not shocked.

 

[scooterbug44]

Can I seriously ask whether or not the people reviewing these loans can do basic math?

We got into this mess because banks were issuing loans that the homeowner couldn't afford to pay - and apparently we didn't learn a pucking thing!

I understand that people's resources may have become more strained due to the economy continuing to worsen, but one would think that they would have had to qualify for these new rates in some way.

Did they break it down as to whether these were primary or second homes?

When I was home at Thanksgiving the local property appraisers office was quite pissed about the fact that the elderly were managing to make their payments, but the 2nd home & landowners from out of county/state were years behind on taxes.

 

[AAbsolute]

Can I seriously ask whether or not the people reviewing these loans can do basic math?

We got into this mess because banks were issuing loans that the homeowner couldn't afford to pay - and apparently we didn't learn a pucking thing!

I understand that people's resources may have become more strained due to the economy continuing to worsen, but one would think that they would have had to qualify for these new rates in some way.

Did they break it down as to whether these were primary or second homes?

When I was home at Thanksgiving the local property appraisers office was quite pissed about the fact that the elderly were managing to make their payments, but the 2nd home & landowners from out of county/state were years behind on taxes.

You sure sound like a Libertarian right now.

That's always the view of the Libertarian or Common Sense Party. Government Stimulus Packages are self refuting. They have to be, as they create nothing but mental impressions.

 

[scooterbug44]

This isn't a political thing, this is a cranial-rectal inversion* thing! :angry:

And a "I am tired of paying my bills when people who are getting special treatment can't be bothered" thing!

*Commonly referred to as head up the arse!

 

[Mango]

You have to analyze this article {or lack of one -- no link provided} from a political standpoint. Anytime you have the OTS making a statement is the reason why. It may as well be called BushBank oversight committee for the protection of Banks. Many Banks get certain charters just to fall under OTS guidelines which are more lax. So, if they state modifications aren't working (albeit they have no statistics to show what worked and what didn't) then maybe there is more money for Bank bailouts? Something to consider......

and depending on the Bank, to do a loan modification, one has to send in financial evidence of ability to pay the new note. They follow the same debt ratios as before which was around 38% gross income.

What could be happening is that people see the properties values sinking fast still, and even the modified loan isn't warranting keeping the home, no matter how much one put as a down payment. From the last legislative meeting with the FDIC chair who had an Indy Mac mod program notch on her belt- the average savings was around $340 or so. If you lost your job, your 401K is shot to hail, and the same home rents for $1200 now and you're paying $1600, what would you do?

 

[Smiling JOe]

So what really happened was that modifying the loans only helped the lenders squeeze a little more out of the homeowners?

 

[traderx]

So what really happened was that modifying the loans only helped the lenders squeeze a little more out of the homeowners?

Cleverly, at a lower interest rate. What a country!