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A Deadbeat Is a Deadbeart Is a Deadbeat

By Robert Stacy McCain on 12.8.08 @ 1:09PM

You can't help uncreditworthy borrowers by adjusting their payments:

"The results, I confess, were somewhat surprising, and not in a good way," John Dugan, head of the U.S. Office of the Comptroller of the Currency, said in prepared remarks for a U.S. housing forum.
"Put simply, it shows that over half of mortgage modifications seemed not to be working after six months." Dugan said . . .
Dugan said recent data showed that after three months, nearly 36 percent of borrowers who received restructured mortgages in the first quarter re-defaulted.
The rate of re-default jumped to about 53 percent after six months and 58 percent after eight months, Dugan said, without providing an explanation for the trend.

Via AOSHQ.

View all comments (7) | Leave a comment

J David| 12.8.08 @ 3:07PM

Maybe "Bob" can provide both an explanation and fix that his Messiah the Obamunist that will magically help those helpless victims of evil corporations. No doubt, the commie-lib Dems have all of the answers that have worked so well over the entire rest of the world...Heh!

J David| 12.8.08 @ 3:10PM

Oh, wait, I'm sorry, socialism hasn't worked anywhere else in the world because, according to Sen. Ted Chapaquiddick Kennedy, it was because HE hadn't been in charge of it.

Bob| 12.8.08 @ 4:34PM

I'm glad you asked, J David. I used to work in the industry and can verify that most payment adjustments will not work for the reasons specified. When you lose a job, or have a medical emergency -- the two most common reasons for a mortgage default -- you would not have the funds for any mortgage payment. Add to that the fact that housing prices have dropped and that most of the mortgages did not require any initial equity, and it is a fool's errand to recast these.

Sheila Bair's recommendation is probably the best I've seen but it would still require a down payment and the ability to pay the new mortgage. This will save a small percentage of mortgages, but we should let the market take care of the rest.

I do believe that companies allowed people to get mortgages they didn't qualify for because they expected housing prices to continue to rise and thus would not lose money if they defaulted. In that case, you could say the companies were "evil" I guess.

Again, as I've constantly stated, a policy of fiscal responsibility on the part of government, companies and individuals is what Republicanism should promote. That means we should increase regulation requiring higher capital requirements, more equity on the part of homeowners, and more equity on the part of mortgage originators. Without "skin in the game" on the part of all parties, the system breaks down.

J David| 12.8.08 @ 5:57PM

WRONGGGGGG!

There are a bunch people who can't pay mortgages they NEVER could afford because crooked politicians passed laws FORCING THEM to do so, and mostly those were commie-lib Dems.

Just a whole lot of baloney to re-write new regulations that were ALWAYS used, often from mere common sense by PRIVATE - not gov't owned banks and financial institutions subverted by crooked politicians who now claim they will fix the problem.

You don't need more regulations to tell a business they are going to lose money if they loan to people who have none. You need to follow the CONSTITUTION and protect free enterprise markets from the meddling of the GOVERNMENT CROOKS. MORE gov't always means less freedom, more corruption and interference. Socialism in any form destroys enterprise, capital creation, desire to risk on investment and etc. that made America the greatest financial and industrial power on earth.