update on 'bailed out' subprime homeowners ...
also included in the members' area due to political policy content ...
(snip)"WASHINGTON (Reuters) - 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 based on data collected from some of the biggest U.S. institutions, like Bank of America, Citibank and JPMorgan Chase, home foreclosure starts fell 2.6 percent in the three months ended in September.
However, data which is to be issued by the OCC and the Office of Thrift Supervision (OTS) next week could throw cold water on a push by some U.S. policymakers for loan modifications as the key remedy for the ailing U.S. financial and economic crisis.
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.
Regulators speaking at an OTS-housing forum did not provide any explanations for the causes behind the data.
"We don't know the answers yet, but these are the types of questions that we have begun asking our servicers in detail," Dugan said."(snip)
The answer would appear to be obvious - once a deadbeat, always a deadbeat !!!. However, I'm sure that these 'bailed out' homeowners are thanking US taxpayers and bank investors for allowing them to continue living in their houses rent-free for the past year !
Re: update on 'bailed out' subprime homeowners ...
I picked up on that one too. Just indicates that they preferred to stay in their precarious financial position. Speculation is like a mistress; it's fine until it fails to deliver.
Re: update on 'bailed out' subprime homeowners ...
^^^ but how precarious is their position really ? They will lose money on their home regardless of whether they continue making mortgage payments or not - because the present market value is far below the outstanding balance of their mortgage. Their credit rating is screwed regardless of whether they continue making mortgage payments or not i.e. NO lender is going to extend them additional credit in any form besides the US gov't. Thus from a 'moral hazard' standpoint, as long as the 'bailout' rules prevent banks from foreclosing, they have nothing additional to lose and many more months (or years) worth of 'free rent' to gain (at eventual US taxpayer expense) by simply remaining in default.