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> 50% Modified Loans back in Default

According to the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision, more than 50% of the loans that were modified in the first half of 2008 have fallen behind on their payments.

Now this evidence can lead to two different scenarios.  First, those who received a loan modification just took it for granted and didn’t plan on paying their mortgage once it adjusted again.  Then there is the issue of job loss which is uncontrollable for some people in this atrocious economy.  Some of the loan modifications are only for a year and that may not be enough time for someone to replace their job.  This should spark the banks to restructure the loan modification so that these borrowers do not fall behind on their payments again.  There is absolutely no reason for borrowers to fall behind if their loan has been modified.  Obviously, a loan modification lowers the monthly payment considerably to the point where making your mortgage payment is comfortable and prevents your family from eating Ramen noodles for every meal.  However, what it does not do is make your payments vanish forever.

I was all for the loan modification when it became available to those troubled borrowers, but now finding out this news makes my stomach turn.  The housing market forecast does not look good right now and anyone that has been searching for a home or reading up on the foreclosure crisis can see this. There is a very small percentage of troubled borrowers out there that deserve a loan modification.  I can now understand the banks hesitation to go through with this financial assistance.

These findings were based on 34 million loans and 60% of them being on first mortgages. Mora than 11% of all the borrowers had missed at least one payment in the first half of 2009.

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