Posted on 12/22/2008 8:21:23 AM PST by NonValueAdded
WASHINGTON (MarketWatch) -- More than half of mortgages modified in the first quarter were at least 30 days delinquent after half a year, and it's necessary to figure out why so many modifications are not preventing re-defaults, regulators said Monday. [NVA: gee, ya think?]
[snip]
"One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months and even eight months," said Comptroller of the Currency John Dugan.
"This trend of increasing delinquencies underscores the need to understand why these modifications have not been more sustainable," he said in a statement.
(Excerpt) Read more at marketwatch.com ...
Let's see a sampling of 5 or 6 case studies with the names redacted but an in depth look at the family circumstances (along with their TV screen measurements) and then we'll all gather up out pitchforks and descend on Washington.
If, you are paying on time- you do not qualify.
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so, does this count as a new foreclosure ?
in another couple of years, AP headlines will read: “Mortgage Foreclosures at 155% !”
If you give someone a better deal if they default the first time, you are surprised they default again? They need to revisit their notes from behavioral psychology 101.
It’s a scam. It was a scam when these people got the loans and it remains a scam when they modify the loans. The people couldn’t qualify the first time and they can’t qualify now. People writing the loans are taking their money and running.
100% of the mortgages were in trouble before refinancing. If now half of them are current, then you just cut the number of defaults in half.
It isn't the number of these mortgages that FAIL that is the problem, these mortgages had already failed. It's the number that are PULLED OUT OF FAILURE that you need to concentrate on.
Meanwhile, people who have legitmate means, legitimate income and a record of on time payment are finding it hard to get loans or to refinance. What a system!
No mystery. W’s economy is a disaster. People need to make money to pay back their loans, regardless of restructuring.
The problem is that modified mortgages are targeting the wrong group. I say modify the mortgages of those who are making their payments on time. Reward the fiscally responsible and free their income to revive the economy.
Then a default rate lower than 100% on these refi loans should be considered 'success?'
GMAC is in on this too, which is why I oppose the auto bailout, many of those bad loans involve them.
What do they need to understand? That the people defaulting on the modified mortgages should have never been given a home loan to begin with? It's not rocket science, certain people should not have ever qualified for any kind of mortgage.
Never again. That's over.
While you’re right that the number of work-outs that succeed is better than the 100% of the defaulted loans that went into the process, what the work-out process is doing is keeping bad loans on the books longer, and dragging out the problem.
One of the reasons why Japan had their “lost decade” (and why I’m increasingly thinking we too will have another “lost decade”) is because of tactics like this, where we’re propping up thousands of people who ultimately cannot afford the house they’re in, we’re propping up banks that should simply go under, we’re propping up business sectors that need to go into bankruptcy (the auto industry) and so on. All at great expense, sucking the capital out of the economy we need for future business.
We need a process whereby we can bring borrowers into a default decision point - and determine whether or not they have a reasonable shot at turning the situation around if the terms of a loan are changed.
Ultimately, there are a large number of people who simply cannot turn the situation around, no matter how many loan terms are changed. They simply bought too much house on too little income, or (more likely) the house price was far too inflated for the median income of the entire area.
Reward the responsible?
Dude.... you’re obviously so very out of touch with the New Reality 2.0.
You need to get right over to Harvard and apply for their MBA program, where things will be explained to you and then you will understand how you’ve been such a sucker for paying your bills on time all your life.
Let’s see now...people not qualified for mortgage loans and unable therefore to pay them in the first place are STILL not paying their mortgages. Nope. Too complicated for me!
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