Mortgage defaults continue to climb

Washington Post

WASHINGTON — Troubled borrowers continue to default at high rates even on home loans that have been modified by lenders, according to a government report issued Friday. The report also found that an increasing number of borrowers default on their loans before making a single payment.

The report by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, which regulate mortgage lenders, focuses on the effectiveness of industry efforts to help troubled borrowers. It finds that a growing number of homeowners are falling behind on their payments and that borrowers with prime mortgages, which traditionally are considered less risky, are a growing part of the problem.

“It’s higher than we have ever seen it, historically, and the fact that it is still climbing is something we are keeping an eye on,” said John Dugan, comptroller of the currency. The report covers two-thirds of the mortgage market.

It also finds that despite increasing government and industry efforts, many borrowers are quickly falling behind on their payments after receiving a modified loan, which can include lowering their interest rate or extending the length of their loans. Of the borrowers who had loans modified early last year, for example, about 35 percent had missed at least three payments nine months after their loan was modified. About 57 percent had missed at least one payment.