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It was reported that throughout the second quarter of this year, seventy-eight percent of loan modification requests resulted in the reduction of the borrower's monthly payment. This reflects a fifty-four percent increase from the first quarter of the year.
The increase is a result of loan servicers becoming less likely to simply add missed payments into the balance of a modified loan.
The report was produced jointly by the Office of Thrift Supervision- the overseer of savings and loans, and the Office of the Comptroller of the Currency. Loan servicers who account for sixty-four percent of all home loans in the U.S. were surveyed.
The servicers reported that they had seen significant changes from earlier practices. Previous procedures did not change or reduce borrower's monthly payments.
It was concluded that loans where monthly payments were indeed reduced were less likely to return to default status.
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