1 in 5 Modified Loans Default Again: Comptroller

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.

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.