Although the pace and volume of loan modifications has slowed since a 2010 peak, repeat modifications are gaining momentum, reports data and analytics group Barclays. According to a recent research report released by the company, more “remodifications” are in the works than ever before, with about 40 percent of recent sub-prime modifications and 10-20 percent of other sector modifications falling in the “remod” category. Interestingly enough, these remodifications do not appear to perform as well as first-time modifications, possibly because many are the results of last-ditch, desperate attempts to keep paying on a mortgage that was not sufficiently modified in 2010 or 2011[1]. As you may recall, early loan-modification programs were roundly criticized for only minimally reducing payments or even adding to monthly payment amounts instead of reducing them. Barclays also suggests, however, that servicers that are likely to remod in the first place also may be less selective about the loans they modify and, as a result, be modifying loans that are ultimately destined for delinquencies and foreclosures.

 

 


[1] http://www.dsnews.com/articles/report-why-repeat-mods-are-making-comeback-2013-02-18