One in five homeowners whose mortgages were modified under a program aimed at reducing foreclosures defaulted again within a year after their payments were cut, the U.S. Comptroller of the Currency reported today.
Twenty percent of modified loans were at least 90 days delinquent within a year in the second quarter, according to the Comptroller’s “Mortgage Metrics Report.” Delinquencies for loans 30 to 59 days late increased 0.4 percentage points to 3 percent from the previous quarter,
“Foreclosures may continue to increase in future quarters as a large number of foreclosures work through the process and alternatives to foreclosure are exhausted,” the Comptroller, a division of the U.S. Treasury Department, said in a statement.
Mortgage delinquencies have increased amid slow economic growth and a U.S. unemployment rate that’s been 9 percent or higher since April. Default notices sent to delinquent homeowners surged 33 percent in August from the previous month, RealtyTrac Inc. said on Sept. 15.
Total loan modifications and alternative payment plans for delinquent borrowers fell to 456,397 in the three months ending June 30, down 19 percent from a year earlier, according to the Comptroller’s report. That included a 35 percent decline in modifications through the government’s Home Affordable Modification Program, which granted 70,071 new payment plans during the quarter.
While the number of modifications fell, they outnumbered the 121,202 completed foreclosures as lenders seized fewer properties, the Comptroller said. Total home forfeitures, including foreclosures, short sales and deeds in lieu of foreclosure, declined 22 percent to 180,151.