Diane Tuman from Zillow.com recently blogged the recent slow down in Loan Modifications. Much of this information came from a recent article posted in The New Yorker in an article called “Not Home Yet”.
One very interestin statistic used was 30% of all homeoners requesting a loan modification eventually bring their payments back to current. Another 30-40% of all homeowners who successfully get their loan modified go to default regardless.
Why would banks deliberately slow down funds, or not even help their borrowers? Two reasons, according to a recent paper by economists at the Boston Fed:
- 30% of delinquent borrowers “self cure,” which means they get back on track themselves.
- Between 30-40% who do get loan mods usually default anyway.
