Markets & Economy

Nearly half of modified mortgages facing rate increases are underwater

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Close to half of modified mortgages facing rate increases are underwater, suggesting that hundreds of thousands of homeowners who were granted relief during the downturn may be at risk of default in the coming years, Black Knight Financial Services data shows. In April, nearly 2 million modified mortgages -- mortgages whose terms were adjusted to help homeowners hold onto their homes -- were facing interest rate resets in the years ahead, and 40 percent of them were underwater, according to Black Knight Financial Services' latest Mortgage Monitor Report. Data shows that negative equity is "one of the primary drivers" of defaults, according to Black Knight Financial Services. So it stands to reason that many borrowers who are already struggling with negative equity might throw in the towel if their mortgage payments increase. If interest rates on all modified mortgages reset in April, homeowners paying a total of 800,000 mortgages would have been forced to grapple with the pre...