Lowering payments decreases chances of redefaulting

According to the Mortgage Modification Metrics report from the Office of Thrift Supervision and the Controller of the Currency, mortgage modifications that reduce monthly payments have a lower redefault rate than modifications that don’t. The report shows that monthly mortgage payments that were decreased by 10 percent had a redefault rate of 26 percent in 2008, while mortgages that increased monthly payments or remained the same had a redefault rate of 50 percent. CNBC’s Diana Olick said unfortunately almost 60 percent of mortgage modifications last year fell in the latter category. The Obama administration’s housing plan aims to reduce monthly payments to lower the redefault rate.