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December 08, 2008

Shocka...People Who Defaulted On Their Mortgages Did So Again After It Was Restructured

It's almost as if they don't have enough money to support the size homes they purchased or something.

"The results, I confess, were somewhat surprising, and not in a good way," John Dugan, head of the U.S. Office of the Comptroller of the Currency, said in prepared remarks for a U.S. housing forum.

"Put simply, it shows that over half of mortgage modifications seemed not to be working after six months." Dugan said based on data collected from some of the biggest U.S. institutions, like Bank of America [BAC 17.09 1.85 (+12.14%) ], Citibank [C 8.17 0.46 (+5.97%) ] and JPMorgan Chase [JPM 35.46 2.11 (+6.33%) ], home foreclosure starts fell by 2.6 percent in the three months ended in September.

...Dugan said recent data showed that after three months, nearly 36 percent of borrowers who received restructured mortgages in the first quarter re-defaulted.

The rate of re-default jumped to about 53 percent after six months and 58 percent after eight months, Dugan said, without providing an explanation for the trend.

Hmmm, why might people continually default on their mortgages? It seems to me their are two broad categories of choices.

First, they bought homes too expensive for their income and thought they could keep taking cash against their home's 'value' or that real estate price would go up forever and they could sell for a profit before their rates went up. Now that the music has stopped they don't have a chair, just a home they can't afford under just about any conditions.

Or second...Bush, Cheney and the Evil Bankers held a gun to their heads and forced them to take a mortgage they knew they could never afford.

Obviously, it's the latter so let's start bailing them out and forgiving their mortgages entirely. Free homes for everyone!

(h/t Andy in the Illinois thread)


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posted by DrewM. at 01:07 PM

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