WASHINGTON — The news is starting to improve for borrowers who have received loan modifications on their mortgages, according data from the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
The agencies reported that 18.7% loans modified in Q2 2009 were at least 60 days past due three months after modification, a decline from the 30% redefault rate for loans modified during the previous four quarters.
Analysts said many early modifications failed to succeed in part because they actually resulted in higher or unchanged monthly mortgage payments. But the data show approximately 80% of loan mods in Q2 and Q3 have resulted in lower payments, and that loans that decreased monthly payments by 20% or more had the lowest redefault rates. The Obama administration reported that in a program it has managed monthly payments have declined by an average of 35%.
Nevertheless, the data shows delinquencies continue to rise even among borrowers with good credit. Some 6.2% of loans were at least 60 days past due in the third quarter, an increase of nearly 17% from the previous quarter. The rise in bad loans was largely driven by an increase in troubled prime mortgages. Some 3.6% of mortgages made to borrowers with good credit were at least 60 days past due at the end of the third quarter, up from 3% in the second quarter and more than double the rate a year ago.
