Banks Agree to Lower More Homeowner Payments
Regulators find banks are reducing more homeowners' monthly payments.
June 30, 2009— -- As the Obama administration and consumer groups have increased the pressure on mortgage providers and servicers, they have started modifying loans of homeowners on the edge at greater rates, according to a new report by two federal regulators.
The Office of Thrift Supervision and the Office of Comptroller of the Currency tracked the performance of 24 million loans valued at more than $6 trillion -- which represent 64 percent of the country's outstanding mortgages -- and found that loan modifications increased.
A higher percentage of those modifications, the report said, actually reduced monthly payments. Earlier loan modifications often did not include reduced monthly payments.
The report found that when homeowners got lower payments, delinquency rates dropped.
"While I'm very concerned about the rise in delinquent mortgages and foreclosure actions, the shift in emphasis by servicers to more sustainable, payment-reducing modifications is a positive step that should show significant benefits in the coming months," Comptroller of the Currency John C. Dugan said.
Among the findings:
Despite the encouraging news, foreclosures continue to increase. A report released this week by the Federal Housing Finance Agency found that even with expanded foreclosure prevention efforts during the first three months of this year – including various moratoria placed on foreclosures – more people still lost their homes than got a modified loan.
