There are two places of work in Washington that operate with each other to set out a extensive report on home loans in the United States. These are the Office of the Comptroller of the Forex and the Place of work of Thrift Supervision.

Their report is the Mortgage loan Metrics Report. In this report they keep track of intently the quantity of financial loans exactly where folks are experiencing foreclosures and who are offered financial loan modifications and how profitable these modifications are.

They appear at the mortgages of 9 countrywide mortgage loan businesses and a few massive thrifts. These twelve are dependable for sixty four% of the home loans in the United States.

Their report is a quarterly report. Simply because the quantity of financial loans is so great their report usually is finalized and released three months after the conclude of a quarter. Their most current report was unveiled in September of 2009 and covered the next quarter of 2009 which finished June 30, 2009.

There are numerous charts in this report. 1 fascinating chart in the report for the next quarter of 2009 focuses on the share of individuals who default once again on their financial loans following a financial loan modification was made. These are people who had their financial loans modified and have been dealing with foreclosures once again simply because they did not continue to make their modified payments.

The chart displays 5 investors – Fannie Mae, Freddie Mac, Govt Financial loans, Private financial loans and Portfolio loans. The 9 countrywide home loan firms and 3 big thrifts support financial loans for Fannie Mae, Freddie Mac, the govt (FHA and VA) and Personal traders. Portfolio loans are people that the house loan firms and thrifts have set up the funds for from their very own money. interest only commercial mortgage preserve these in their own portfolio instead than offering them to one of the other four investors.

Below are some exciting things from the chart:

· Wherever from 27.seven% to 34.four% of individuals whose financial loans were modified for the other buyers experienced unsuccessful to continue to make their mortgage payments 3 months following the loans were modified. Only 14.% of the individuals whose financial loans were in the portfolios of the home loan companies and thrifts had failed to carry on to make the payments following the financial loans have been modified.

· 40.two% to 49.8% of the folks whose loans experienced been marketed to the other investors and whose financial loans were modified had unsuccessful to keep on to make their payments on time after six months. Only 28.7% of the folks whose loans were in the portfolios of the home loan businesses and thrifts experienced failed to keep on to make the payments after the loans have been modified.

· The proportion of individuals whose financial loans had been sold to other traders and who had unsuccessful to keep on to make their payments soon after 9 months was amongst forty nine.8% and fifty eight.three%. Only 38.seven% of the individuals whose financial loans ended up in the portfolios of the home loan companies and thrifts experienced unsuccessful to proceed to make the payments soon after the financial loans were modified.

· The proportion of people whose financial loans experienced been bought to other investors and who experienced unsuccessful to carry on to make their payments soon after twelve months was amongst fifty two.four% and 59.one%. Only 42.4% of the folks whose loans have been in the portfolios of the house loan firms and thrifts had failed to keep on to make the payments right after the financial loans were modified.

None of the financial loans becoming tracked in this chart are financial loans in which modifications have been manufactured under the Producing House Affordable Modification Software.

For each and every trader the share of individuals who fall powering on their payments and face foreclosure again boosts the further they are from the date their financial loans had been modified. A closer appear at this shows that the percentages are relatively close and steady for every of the investors besides the Portfolio trader.

The percentages of folks who are facing foreclosures once again in the Portfolio classification soon after 3, 6, 9 and 12 months are considerably reduce than the percentages for the other folks. In the Mortgage loan Metrics report it is suggested that this may be because of to variations in modification packages and the investor’s flexibility to modify the conditions of the loan.

There May Be a Completely Various Cause

Portfolio financial loans are those retained by the home loan organizations and Thrifts researched in this report. These are loans in which these firms and thrifts invested their own funds. The other loans they have marketed to Fannie Mae, Freddie Mac, the Govt (FHA, VA, etc.) and Personal Buyers on Wall Avenue. Whilst the month-to-month payments are created to the home loan organizations and thrifts, they just move it on to the conclude trader.

These mortgage firms and thrifts shed more cash on loans in their very own Portfolio that finish up in foreclosure than they do on the loans they have marketed to everyone else. It appears like modifications they are making on the loans in their possess portfolios are far more favorable than the modifications they are generating on the loans of other buyers.

Is There Anything at all in the Report to Support This?

There just takes place to be yet another chart in the report which implies that the mortgage organizations and thrifts are carrying out this. This chart demonstrates the sorts of loan modifications that have been accomplished during the next quarter of 2009. Listed here is what that chart reflects:

· The mortgage loan firms and thrifts decreased the desire price on the loans they modified in their personal portfolios 84.1% of the time. This was increased than any other team. The fascination costs had been modified seventy seven% of the govt financial loans. Interest charges have been decreased on 43.six% of the Fannie Mae loans modified, 51.3% of the Freddie Mac financial loans modified and 63.6%of the non-public trader financial loans modified.

· The home loan companies and thrifts prolonged the durations of the financial loan to recuperate any reductions in payment on seventy two.4% of their possess loans. They prolonged the expression on seventy seven.6% of the Freddie Mac loans. The percentages of the relaxation ended up decrease – forty seven.8% of the Fannie Mae Loans, forty six.4% of the Govt financial loans and thirteen.one% of the Personal Trader financial loans.

· The mortgage loan businesses and thrifts decreased the principal balances on 30.five% of the financial loans they modified in their own portfolios. They did not minimize the principal balances on any financial loans for other investors.

· The house loan organizations and thrifts deferred a portion of the principal because of on 4.seven% of the financial loans they modified in their possess portfolios. They only did this .1% of the Fannie Mae loans. There ended up no principal deferments on any loans for any of the other investors.

· The home loan businesses and thrifts only froze the present fascination costs on 5.5% of the financial loans they modified in their possess portfolios. The percentages on financial loans in which they froze the desire costs on financial loans for the other buyers ranged from five.9% to sixteen.6%.

Let’s outline these terms.

· Charge Reduction – The interest rate on the financial loan is diminished.

· Fee Freeze – The desire charge on the loan is frozen at the degree it was at.

· Time period Extension – The size of the bank loan was prolonged to get better any reductions in payment.

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

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

This chart plainly suggests that throughout the second quarter the mortgage firms and thrifts took action to give a lot more favorable modifications on the loans in their portfolios than on the financial loans they bought to the other individuals. This is plainly indicated by the truth that they decreased the curiosity rates on eighty four.one% and prolonged the conditions on seventy two.four% of their financial loans. They also lowered the principal on thirty.five% and deferred the principal on 4.7% of their financial loans.

The stunning factor below is the thirty.five% principal reduction on the financial loans in their possess portfolios. The mortgage loan market has persistently fought towards legislation proposed in congress to give judges the electricity to do this. Yet they are carrying out it on their personal loans.

The house loan market has been lobbying that mortgage modifications never perform. They frequently say that whilst modifications may possibly temporarily postpone a foreclosure, the majority of individuals will fall driving on their payments and face foreclosure once again. However these charts will not present that. They demonstrate that virtually 60% of the individuals dealing with foreclosures whose loans are in the portfolios of the home loan organizations and thrifts have been in a position to stay recent on their modified home loans twelve months right after they have been modified.

It looks like far more stress demands to be put on mortgage companies to modify all loans in the exact same way as they are modifying individuals financial loans in their possess portfolio.