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 July 09, 2009

Loan Modifications being Avoided by Lenders
A new report published by the Federal Reserve Bank of Boston states that the recently-introduced seventy-five billion dollar foreclosure bailout plan by the new administration is likely to fail. Failure is predicted because the Boston Fed reports that mortgage lending institutions are unable to make a profit on a modified mortgage.
The Boston Federal Reserve recently analyzed over 665,000 loans which were issued between the years of 2005 and 2007 which have since then fallen into serious delinquency. The study found that just three percent of borrowers took advantage of loan modification programs, and five and one half percent received modifications which did not result in lowered monthly installments.

Additionally, nearly 45% of approximately one hundred fifty thousand borrowers who were given some type of loan modification have since fallen behind on payments once again. Approximately thirty percent of borrowers were able to resolve their problems without the aid of their lenders.