More Than Half of Modified Loans Back in Default

More than 50 percent of home owners whose loans were modified in the first six months of 2008 had fallen behind on their payments a year later, the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision said Wednesday.

The situation could have been worse. One-third of borrowers whose monthly payments were reduced by 20 percent or more had fallen behind again with a year. But more than 60 percent of borrowers whose payments were left unchanged or increased fell behind.

The report covers 34 million loans, representing 60 percent of first mortgages on residences. More than 11 percent of all borrowers covered by the report had missed at least one payment in the first six months of 2009.

Source: The Associated Press, Alan Zibel (09/30/2009)