While lenders have come under fire for not doing enough to help borrowers remain in their homes, it looks as though those who have tried are meeting with surprisingly high failure rates. An Office of Comptroller of the Currency (OCC) report shows that mortgages which were modified by the lender (actual terms changed to lower payments, rates, and / or balances) to make the payments possible continue to fail.
After three months, nearly 36 percent of the borrowers had re-defaulted and were more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent. The data was similar for mortgages modified in the second quarter, with 39 percent re-defaulting after three months and 51 percent after six months.
Why has this happened? Experts speculate that the loans were made to borrowers who aren't capable of managing a mortgage under any circumstances and never should have been given one. Others theorize that the reductions weren't enough and the borrowers' positions remained too precarious to make regular payments possible.
The Mortgage Bankers Association recently released statistics that, like the OCC ones above, suggest that many foreclosures are merely being postponed, not prevented. A weak economy, falling home values, and rising unemployment may possibly be contributing to the overall failure rate of mortgages.
Or it might simply be that as Clare Booth Luce claimed in The Book of Laws, "No good deed goes unpunished."
