Mortgage modifications offer a bit of good news in the dour foreclosure market:"The report said recent modifications that reduce principal balances on loans have a lower default rate than those that merely cut the interest component of monthly payments.
But most banks don't trim the overall balance when they modify loans, according to the report. Only one in five modifications reduced the loan amount, with 70 percent of those studied in this year's first quarter actually increasing the total by adding service charges and late payments to the loan balance, the report said.
However, through adjustments of interest rates, about 89 percent of first-quarter modifications involved some reduction in monthly payments, the report said. Nearly 78 percent cut payments 10 percent or more.
But the absence of loan-balance reduction in most modifications will hamper future foreclosure prevention efforts, the report said. The authors noted that home prices have declined more than 30 percent from their 2006 peak, and nearly one-quarter of homeowners owe more than their homes are worth."
But most banks don't trim the overall balance when they modify loans, according to the report. Only one in five modifications reduced the loan amount, with 70 percent of those studied in this year's first quarter actually increasing the total by adding service charges and late payments to the loan balance, the report said.
However, through adjustments of interest rates, about 89 percent of first-quarter modifications involved some reduction in monthly payments, the report said. Nearly 78 percent cut payments 10 percent or more.
But the absence of loan-balance reduction in most modifications will hamper future foreclosure prevention efforts, the report said. The authors noted that home prices have declined more than 30 percent from their 2006 peak, and nearly one-quarter of homeowners owe more than their homes are worth."
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EDITOR NOTE: Banks are opposed and rarely reduce the principle. Up until recently there has been MAJOR opposition to reducing principle. In Arizona many property values are at 1/4 of what they were in 2006. There are new programs that have about a 20% success rate in lowering the principle without going through bankruptcy. The qualifications are high and I will be blogging on the newer programs very soon.
Until then here are the rankings for underwater and drowning homeowners according to Corelogic!
Top 10 states with highest share of negative equity mortgages
1. Nevada (68 percent of 592,000 mortgages)
2. Arizona (50 percent of 1.3 million mortgages)
3. Florida (46 percent of 4.5 million mortgages)
4. Michigan (38 percent of 1.4 million mortgages)
5. California (33 percent of 6.9 million mortgages)
6. Georgia (28 percent of 1.6 million mortgages)
7. Idaho (24 percent of 243,000 mortgages)
8. Virginia (23 percent of 1.2 million mortgages)
9. Maryland (22 percent of 1.4 million mortgages)
10. Utah (20 percent of 470,000 mortgages)
1. Nevada (68 percent of 592,000 mortgages)
2. Arizona (50 percent of 1.3 million mortgages)
3. Florida (46 percent of 4.5 million mortgages)
4. Michigan (38 percent of 1.4 million mortgages)
5. California (33 percent of 6.9 million mortgages)
6. Georgia (28 percent of 1.6 million mortgages)
7. Idaho (24 percent of 243,000 mortgages)
8. Virginia (23 percent of 1.2 million mortgages)
9. Maryland (22 percent of 1.4 million mortgages)
10. Utah (20 percent of 470,000 mortgages)
