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Lenders more generous with loan mods

Reduced redefaults tied to lower monthly payments
Published on Sep 30, 2009

More than three out of four loan modifications made by lenders during the second quarter reduced borrowers' monthly payments, up from 54 percent in the first three months of the year, according to a report released today by federal bank regulators.That's welcome news, because loan modifications that reduce borrowers' monthly payments are less likely to redefault, the report from the U.S. Office of the Comptroller of the Currency and the Office of Thrift Supervision said.The report also showed lenders were much more willing to engage in short sales than they were a year ago, which helped limit annual growth in the number of homes completing the foreclosure process.Newly initiated loan modifications and repayment plans (439,574) outnumbered newly initiated foreclosures (369,226) during the second quarter. Foreclosure starts were up 28 percent from a year ago, but loan modifications and repayment plans were up more sharply -- 74.8 percent.The number of homes in the foreclosure process --...

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