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Mortgage Redefaults Fall in Third Quarter After Larger Payment Reductions

Homeowners whose mortgage payments were changed under a program aimed at reducing foreclosures redefaulted at a slower rate after lenders gave more generous modifications, the U.S. Comptroller of the Currency said today.

About 18 percent of modified loans were at least 90 days delinquent within a year in the third quarter, compared with 20 percent in the previous three months, according to the Comptroller’s “Mortgage Metrics Report.” Delinquencies for loans 30 to 59 days late decreased 3.3 percentage points from the previous quarter, to about 34 percent.

The most recent redefault rate contrasts with 2008, when more than half of loans defaulted again within a year, according to previous “Mortgage Metrics” reports. Payment Reductions

The average modification implemented in the third quarter reduced payments by about 24 percent, or $382 a month. Loans reworked under the U.S. government’s Home Affordable Modification Program lowered payments by 35 percent on average, or $567.

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