Mortgages being restructured under the Obama plan are beginning to show measurable successes, according to a recent report from the Office of the Comptroller of the Currency. Although the default rate through 2008 on such loans had been running at approximately 30%, data for the second quarter of 2009 indicates that currently only about 18% are running 60 days past due after being on the program for at least three months.

     The explanation for this improvement is not hard to find. One of the reasons that the earlier modifications ran at such a high default rate is that the process often resulted in the borrower having to make the same loan payments - if not even higher ones ! By contrast, 80% of the more current workouts have resulted in lower monthly payments which have resulted in lower default rates, with the lowest payments resulting in the lowest number of defaults. According to recent government reports, monthly payments have now dropped by about 35% under the loan modification program.

     This good news comes just in time, as rising delinquencies resulting from increasing job losses by normally good-credit borrowers has been pushig the number of troubled loans higher in recent months. Not surprisingly, as job losses have mounted, so have home loan delinquencies as the problem becomes one that involves prime borrowers, not the sub-prime borrowers we have heard so much about. By finally being able to confront such situations with loan modification packages which reflect the reality of reduced family incomes, the program may actually accomplish the president's stated goal of enabling people to stay in their homes.

     The program has a long way to go, however. According to recent estimates, of the approximately 53,000,000 outstanding mortgages in this country, approximately 3,285,000 are currently sixty days in arrears. 

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