Homeowners Behind on Modified Loans
More than half of homeowners were at least 30 days behind on their mortgage payments six months after having their loans modified, according to new data from the Office of the Comptroller of the Currency. Highlighted in today’s Wall Street Journal, the OCC data also show that more than one-third were behind just three months after having their loans modified. The numbers come from the nation’s 14 largest banks, and represent 60% of the mortgage industry.
The OCC doesn’t know if the modifications weren’t radical enough to make the loan affordable, or if the mortgages were so badly underwritten they couldn’t be fixed. (Or perhaps the homeowner’s financial circumstances have deteriorated since the modification, i.e., a job loss.)
Rep. Barney Frank (D-MA) has said he may tie up the rest of the $700 billion in federal bailout money unless some of it goes to keep people out of foreclosure, suggesting this is what most Americans want, according to an AP report.
But I’m not sure that’s actually the case, at least judging by the response to last week’s Yahoo!Finance column. In that piece, I suggested the government consider a refinance plan for homebuyers who saved up a downpayment and have never been late in their mortgage payments. That will free up dollars to be spent or saved, benefitting the economy.
This was not a tongue-in-cheek column. Anecdotally, I’ve found over the years in covering personal finance that many of the people who dig themselves really deep into debt tend to stay bogged down in the issues that got them in trouble. The 360-degree turnaround is the exception, not the rule. So I’m not all that surprised that large numbers of homeowners are behind in their modified loans.
What I am surprised about is that Congress continues to allow banks to hose the American public with a range of egregious practices after we’ve provided them with the bailout money. A few examples:
-The average costs of checking-account fees, including ATM surcharges, bounced-check fees and monthly service fees have soared to record highs, according to a new study by Bankrate.
-The average bounced check and overdraft fees could hit an average of $40 by the end of 2009, according to one analysis.
-Credit cards are now increasing interest rates on customers who have had no change in their finances; while the average rate is about 15 percent, someone who pays late just once could see their rate top 30 percent. Here are few tips to deal with abusive bank practices from an appearance over the weekend on Fox New York:
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