Homeowners redefaulting after getting aid
Mon Dec 8, 2008 3:26pm EST Reuters
By John Poirier and Patrick Rucker
WASHINGTON (Reuters) More than half of mortgages modified in a bid to avoid foreclosure fell delinquent within six months, a top U.S. banking regulator said on Monday, casting doubt on a proposal to rewrite home loans en masse.
Comptroller of the Currency John Dugan said it was unclear why so many borrowers ran into trouble again so soon after getting help, and that raises questions about how policy-makers should address loan modifications.
“Is it because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers? Is it because consumers replaced lower mortgage payments with increased credit card debt?” Dugan said at a housing conference in Washington organized by the Office of Thrift Supervision.