Over half of modified mortgages default again within 6 months

Just another example of bailouts that don’t work.

MarketWatch says  A study looking at loans that were modified in the first three months of 2008 showed that 37% of borrowers were more than 30 days behind on their payment within three months, and 55% had re-defaulted within six months¸ said Grovetta Gardineer, a managing director at the Office of Thrift Supervision, which conducted the study.

The statistics echoed the results of a similar report released last year by the Office of Comptroller of the Currency that also showed a similar high level of re-defaults on modified mortgages.

The testimony about the success rate for loan modifications comes a week after President Barack Obama announced a more ambitious plan costing some $75 billion to help homeowners refinance or modify their loans before they have technically defaulted.

So now we’ll also get to pay to help people before they default, and after they default the first time.  How many chances are we going to give deadbeats and idiots who bought more house than they could afford? 

They should default and go into foreclosure.  The bank (or mortgage provider) should take possesion of the property and sell it.  A true fair market price for the home is then established and the holder of the mortgage writes down the loss.

That’s the way to get through this mess.  The constant renogotiating of terms simply delays the inevitable and is making this drag on and on.  We’d be through it by now if the government would simply let the free market work.


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