S&P Says Loan Mods Don’t Work Standard & Poor’s Ratings Services reported in February that loan modifications are not working, saying most of these loans are in arrears within a year of being reset. Its analysis found that 4 out of 5 modified notes that occurred from 2007 to 2010 were in default within two years. Borrowers made, on average 7.8 payments before falling behind again. S&P’s results came from analyzing more than 1 million non-agency residential mortgage-backed securities data provided by CoreLogic. Because of these re-default numbers, the report concluded that loan modifications are really only a short-term solution. S&P actually believes principal reductions have a much better success rate. However, these only account for 3% of loan modifications. The S&P report is just further evidence to document why the government should not step in to “help” with any more ideas or programs. Unpleasant as it is, we must let the system run its course....
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