"After receiving a loan modification, borrowers are redefaulting on their mortgages at alarming rates, Comptroller of the Currency John Dugan said December 8. In comments at a regulatory housing forum, Dugan said that 51 percent of borrowers that received a loan modification in the second quarter were more than 30 days past due six months later. "Put simply, it shows that over half of mortgage modifications seemed not to be working after six months," he said.

Dugan said he did not know why redefault rates were so high, but that the OCC and OTS, as part of a report on the extent of loan modifications, are attempting to find out. Among the possibilities Dugan cited were:

• The modifications did not reduce monthly payments enough to be truly affordable to the borrowers.
• Consumers replaced lower mortgage payments with increased credit card debt.
• The mortgages were so badly underwritten that the borrowers simply could not afford them, even with reduced monthly payments?

“We don't know the answers yet," he said.

The OCC and OTS are expected to release their Mortgage Metrics report mid-December, based on data received from national banks and thrifts. The report covers nearly 35 million loans worth more than $6.1 trillion — roughly 60 percent of all first-lien mortgages in the country. The report is expected to show increasing delinquencies and foreclosures in process for all first-lien mortgages held by national banks and federal thrifts, Dugan said, though new foreclosures decreased by 2.6 percent from the second quarter. "

- Appraiser News Online Headlines
Last Updated: December 10, 2008
Vol. 9, No. 23/24

I think the media did a great disservice with his info.  Most news outlets spun this in a negative light.  I personally feel this report shows positive results.  If 51% of people who had a loan modification were 30+ days late 6 months after their loan modification, that means 49% were paying on time.  That sounds like it worked.  The weatherperson is incorrect more than that and nobody is cutting the weather from their broadcast.

100% of the loans in question were headed to foreclosure.  Having 49% of the loans being paid on time 6 months into a loan modification benefits the bank, the homeowner, the community, and helps to slow the decreasing home values.  

As taxpayers, we have all been forced to lend the Nation's Banks hundreds of Billions of dollars.  We need the banks to assist thier customers and together emerge from this downturn.