Thread: Mortgage defaulters default again—even after modifications

financialweek.com
Mortgage defaulters default again—even after modifications
OCC study finds many homeowners who get help with their mortgages fall behind again; principal forgiveness still rare, though

By Neil Roland
December 8, 2008 4:29 PM ET

In a possible setback to Congress’s efforts to help struggling homeowners get their mortgage payments reduced, a federal bank regulator released data showing that over half the borrowers whose mortgages were modified slipped back into delinquency within six months.

The new study from the Office of the Comptroller of the Currency put Federal Deposit Insurance Corp. chairwoman Sheila Bair and House Financial Services Committee chairman Barney Frank (D-Mass.) on the defensive.

Ms. Bair and Mr. Frank have advocated spending money from the Treasury Department’s $700 billion financial rescue package to help struggling homeowners by systematically modifying their mortgages.

The new data also prompted Office of Thrift Supervision director John Reich to suggest federal efforts to help homeowners should focus on stimulating the economy rather than reducing mortgage payments.

“Many defaults are ultimately related to things that happen in people’s everyday lives, such as job loss, rising health-care costs and divorce,â€

If you lose your job, you can't pay the mortgage--PERIOD! It doesn't matter what interest rate or principle reduction happens. No job, no food and to hell with mortgage or credit card debt.