OCC: High Number of Re-defaults on Modifications

Re-defaults of newly modified loans are "remarkably high," according to the Office of the Comptroller of the Currency. The OCC released data showing that 36% of modified loans are 30 days past due after three months. "After six months, the rate was nearly 53% and after eight months, 58%," Comptroller John Dugan said at an Office of Thrift Supervision housing forum. Using first quarter data, the OCC also found that 35% of modified loans were 60-days past due after six months. "Not all re-defaulted mortgages go to foreclosure," Mr. Dugan said. But the OCC is beginning to ask servicers why the re-default is so high. The Comptroller also gave a preview of the third quarter OCC/OTS report on loan workouts and foreclosures that will be released soon. He noted that loan modifications have nearly doubled since the first quarter and foreclosure starts fell 2.6%. Foreclosure starts totaled 288,740 in the second quarter.