There are two offices in Washington that perform collectively to set out a extensive report on home loans in the United States. These are the Business office of the Comptroller of the Currency and the Workplace of Thrift Supervision.

Their report is the Mortgage Metrics Report. In this report they monitor carefully the amount of financial loans the place men and women are facing foreclosure and who are provided financial loan modifications and how successful these modifications are.

They search at the home loans of 9 countrywide mortgage loan organizations and 3 massive thrifts. These twelve are responsible for sixty four% of the mortgages in the United States.

Their report is a quarterly report. Due to the fact the quantity of financial loans is so fantastic their report normally is finalized and released 3 months following the conclude of a quarter. Their most modern report was introduced in September of 2009 and covered the next quarter of 2009 which ended June thirty, 2009.

There are several charts in this report. 1 interesting chart in the report for the second quarter of 2009 focuses on the proportion of individuals who default yet again on their financial loans soon after a mortgage modification was produced. These are folks who had their loans modified and ended up experiencing foreclosure once more due to the fact they did not continue to make their modified payments.

The chart displays 5 traders – Fannie Mae, Freddie Mac, Authorities Loans, Private financial loans and Portfolio loans. The 9 countrywide house loan firms and a few massive thrifts service loans for Fannie Mae, Freddie Mac, the govt (FHA and VA) and Private buyers. Portfolio loans are people that the house loan firms and thrifts have put up the funds for from their own money. They keep these in their very own portfolio rather than promoting them to 1 of the other four buyers.

Here are some exciting objects from the chart:

· Anyplace from 27.7% to 34.4% of men and women whose loans have been modified for the other traders experienced unsuccessful to carry on to make their house loan payments 3 months right after the loans were modified. Only 14.% of the individuals whose loans ended up in the portfolios of the mortgage loan organizations and thrifts experienced failed to continue to make the payments following the financial loans ended up modified.

· 40.two% to forty nine.8% of the men and women whose financial loans had been marketed to the other investors and whose financial loans ended up modified had failed to carry on to make their payments on time right after six months. Only 28.seven% of the people whose loans were in the portfolios of the home loan companies and thrifts had unsuccessful to carry on to make the payments right after the financial loans have been modified.

· The share of people whose financial loans experienced been bought to other investors and who had unsuccessful to proceed to make their payments following 9 months was in between 49.eight% and 58.three%. Only 38.seven% of the folks whose loans ended up in the portfolios of the mortgage companies and thrifts experienced unsuccessful to carry on to make the payments following the financial loans had been modified.

· The percentage of men and women whose loans experienced been bought to other traders and who had unsuccessful to continue to make their payments soon after twelve months was amongst fifty two.4% and fifty nine.one%. Only 42.four% of the individuals whose loans have been in the portfolios of the mortgage businesses and thrifts experienced unsuccessful to carry on to make the payments soon after the loans were modified.

None of the financial loans becoming tracked in this chart are financial loans the place modifications had been produced below the Making Property Affordable Modification System.

For every single trader the share of individuals who drop driving on their payments and confront foreclosure once again boosts the additional they are from the date their loans have been modified. A closer seem at this exhibits that the percentages are relatively close and regular for each of the traders other than the Portfolio trader.

The percentages of individuals who are experiencing foreclosures again in the Portfolio category soon after three, six, nine and twelve months are substantially reduced than the percentages for the others. In the Mortgage Metrics report it is proposed that this may possibly be thanks to variations in modification programs and the investor’s flexibility to modify the terms of the loan.

There Could Be a Absolutely Various Reason

Portfolio loans are people held by the home loan companies and Thrifts researched in this report. These are loans in which these organizations and thrifts invested their own funds. The other financial loans they have marketed to Fannie Mae, Freddie Mac, the Federal government (FHA, VA, and so forth.) and Personal Buyers on Wall Road. While the month to month payments are manufactured to the mortgage companies and thrifts, they just move it on to the end trader.

These mortgage loan organizations and thrifts lose far more money on loans in their personal Portfolio that end up in foreclosure than they do on the loans they have sold to everyone else. It appears like modifications they are producing on the financial loans in their own portfolios are more favorable than the modifications they are generating on the loans of other investors.

Is There Everything in the Report to Help This?

There just happens to be another chart in the report which indicates that the mortgage firms and thrifts are carrying out this. This chart demonstrates the types of bank loan modifications that have been accomplished during the 2nd quarter of 2009. Below is what that chart demonstrates:

· The mortgage companies and thrifts decreased the interest rate on the financial loans they modified in their possess portfolios 84.one% of the time. This was greater than any other group. The fascination costs ended up modified seventy seven% of the govt loans. Fascination charges had been diminished on 43.6% of the Fannie Mae financial loans modified, 51.three% of the Freddie Mac loans modified and 63.6%of the personal investor financial loans modified.

· The mortgage loan firms and thrifts extended the durations of the financial loan to get well any reductions in payment on seventy two.4% of their possess loans. They prolonged the phrase on seventy seven.6% of the Freddie Mac financial loans. The percentages of the rest have been lower – 47.eight% of the Fannie Mae Loans, forty six.4% of the Federal government loans and 13.one% of the Private Trader loans.

· The mortgage organizations and thrifts diminished the principal balances on 30.five% of the financial loans they modified in their personal portfolios. They did not decrease the principal balances on any loans for other buyers.

· The mortgage businesses and thrifts deferred a portion of the principal owing on 4.7% of the financial loans they modified in their own portfolios. They only did this .1% of the Fannie Mae loans. There were no principal deferments on any financial loans for any of the other investors.

· The house loan businesses and thrifts only froze the present interest prices on five.five% of the financial loans they modified in their very own portfolios. The percentages on loans the place they froze the fascination charges on loans for the other traders ranged from 5.9% to sixteen.six%.

Let’s determine these phrases.

· Fee Reduction – The interest price on the mortgage is decreased.

· Rate Freeze – The fascination rate on the loan is frozen at the stage it was at.

· Time period Extension – The length of the loan was extended to get better any reductions in payment.

· Principal Reduction – The volume still owed on the mortgage was diminished.

· Principal Deferral – Some of the cash owed was deferred to the conclude of the financial loan.

This chart plainly signifies that during the next quarter the mortgage businesses and thrifts took motion to give far more favorable modifications on the financial loans in their portfolios than on the loans they offered to the other people. This is obviously indicated by the reality that they lowered the fascination rates on eighty four.1% and prolonged the terms on 72.four% of their financial loans. They also decreased the principal on thirty.5% and deferred the principal on 4.7% of their loans.

The stunning issue listed here is the thirty.5% principal reduction on the financial loans in their possess portfolios. The house loan business has consistently fought against laws proposed in congress to give judges the energy to do this. Yet they are undertaking it on their personal loans.

belgraviapropertyfinance.co.uk has been lobbying that loan modifications never work. They frequently say that whilst modifications may quickly postpone a foreclosures, the majority of men and women will tumble powering on their payments and experience foreclosure yet again. Yet these charts never show that. They present that almost sixty% of the men and women experiencing foreclosure whose financial loans are in the portfolios of the mortgage loan companies and thrifts have been in a position to stay existing on their modified mortgages twelve months after they have been modified.

It seems like far more strain requirements to be positioned on mortgage loan businesses to modify all financial loans in the identical way as they are modifying individuals loans in their personal portfolio.