More than half of homeowners who had their mortgage loans modified in the first quarter of 2008 fell delinquent within six months, according to new data from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. The study, which covers loan modifications by the 14 largest national banks and thrifts, shows that nearly 36 percent of those borrowers were more than 30 days past due just three months after their loan was modified, while nearly 53 percent were past due after six months and 58 percent after eight months.
“The question is, why is the number of re-defaults so high?” said John C. Dugan, comptroller of the currency. He went on to suggest that several factors, such as increased consumer credit card debt and the possibility that loan modifications did not result in truly affordable payments, could be to blame. “The answers are important, because they have important ramifications for the foreclosure crisis and how policymakers should address loan modifications, as they surly will in the coming weeks and months,” Dugan said.