Mortgage modifications improving with time

Mortgage modifications in 2010 have only 1 in 10 borrowers were seriously delinquent, down from 3 in 10 in 2008.

April Saul/Philadelphia Inquirer/MCT/Newscom
Robert Cooke (left) poses with daughter Allison, sons Chris and Zachary, and his wife, Jill, outside their family home in Chester Springs, Pa., Sept. 9. In 2008, Mr. Cooke lost his job and after first being told to make smaller payments through the government's mortgage-modification program, he learned he was not eligible and faced foreclosure by CitiMortgage. A new report says those with more recent mortgage modifications are at less risk of default.

Homeowners with more recent loan modifications are less likely to default on their payments, a report Friday showed.

Thirty percent of modifications made in 2009 were seriously delinquent or in the foreclosure process, according to a second-quarter study released by the Office of the Comptroller of the Currency and the Office of Thrift Supervision. That compares to 45 percent of borrowers with modifications made in 2008.

More recent figures show this trend is continuing.

Only one in 10 borrowers with a 2010 modification were three months behind. But two of 10 with 2009 loan modifications were seriously delinquent, and three of 10 borrowers with 2008 loan modifications were at least three months late.

The improvement reflects the success of modifications that reduce the monthly payment, the report said. More than 90 percent of second-quarter modifications reduced the monthly principal and interest, while more than half reduced that amount by 20 percent or more.

There were 504,000 more home retention actions — including modifications, trial period plans and payment plans — in the second quarter than in the previous quarter.

Still, mortgage delinquencies remain high overall. The percentage of borrowers who were current on their mortgages was unchanged from the previous quarter at 87.3 percent, but down from 88.6 percent a year ago.

The number of mortgages that were at least three months behind and new foreclosures fell during the quarter to the lowest levels in a year.

But the number of completed foreclosures jumped 7 percent from the first quarter and were 54 percent higher than a year ago as lenders and servicers exhausted all ways to help seriously delinquent borrowers.

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