Defaulting Homeowners Default Again After Relief
Roughly three in five people who got bailed after failing to pay back home loans are back in trouble in short order according to a shocking government report. (Well, shocking to government officials. Otherwise, entirely predictable.)
Recent data suggests that many borrowers who received help with mortgage modifications earlier this year tended to re-default on their payments, a top U.S. banking regulator said on Monday. “The results, I confess, were somewhat surprising, and not in a good way,” said John Dugan, head of the U.S. Office of the Comptroller of the Currency, in prepared remarks for a U.S. housing forum. “Put simply, it shows that over half of mortgage modifications seemed not to be working after six months,” he said.
Dugan said recent data showed that after three months, nearly 36 percent of borrowers who received restructured mortgages in the first quarter re-defaulted. The rate of re-default jumped to about 53 percent after six months and 58 percent after eight months, Dugan said, without providing an explanation for the trend.
Explanation? Bad credit risks don’t stop being bad credit risks? That’s lawhawk‘s guess, too.
Can it be that these people should never have been homeowners in the first place? Maybe the problem really is home owners who should not be owning a home in the first place? What happened to income verification?
Bruce McQuain, too: “Sometimes a stiff is just a stiff.”
Tyler Cowen thinks it interesting but provides no conclusions. His commenters, though, provide some useful inputs.