Loan Modification Performance

Recently, the OCC released their mortgage metrics report covering the 3rd quarter of 2011.

I want to cover some loan modification performance numbers and unfortunately it shows that loan modification is just putting off the inevitable for some people.

What is staggering about this chart (click for a larger image) is that 49.5% of mortgages modified in 2008-2011 are current. The rest of them are delinquent (re-default) or those borrowers have completed a short sale, deed-in-lieu or foreclosure.

More recent loan modifications are doing better with 74% of modified mortgages current in 2011 but unfortunately for a lot of loan modifications the homeowners are not able to keep their home.

This points to several issues with loan modifications and clearly the larger the payment reduction, the higher the rate of people that are able to keep on making payments. It also points out to me that the recession clearly didn’t help things and that even people that were able to afford lower payment ended up having to let go of their house.

Don’t get me wrong, a loan modification is still a valuable tool and option for borrowers but it may be a good idea to look at the overall financial picture and goals to make decision to sell the property instead of holding on to a negative equity asset.

Tagged with: loan modification

Filed under: short sale

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