31 Aug Mortgage Modifications Can Hurt
Mortgage modifications can hurt. Here is a summary of a very recent study on mortgage modifications by Alan M. White, Assistant Professor, Valparaiso University School of Law, with my emphasis added.
“The gist is that voluntary mortgage modifications are not reducing principal debt, and are in fact increasing it, and that many modifications are not even reducing monthly payments. In addition, whether a homeowner gets a modification, and what kind they get, depends a great deal on who their servicer is.
“The data in the report covers about 100,000 subprime mortgages, about 4,000 of which were modified in the last twelve months. The most common modifications are interest rate reductions to reduce the payment, interest rate freezes on ARMs, and recasting of arrears and reamortization, which increases principal debt and monthly payments.”
The working title of this not-yet-published study is REWRITING CONTRACTS, WHOLESALE: DATA ON VOLUNTARY MORTGAGE MODIFICATIONS FROM 2007 AND 2008 REMITTANCE REPORTS.
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