Modified mortgages fall back into default

WASHINGTON, Dec. 9 (UPI) -- Modifying mortgages failed to prevent defaults in more than half of the cases in the first half of the year, a federal regulator said.

In the first quarter of the year 53 percent and in the second quarter 51 percent of borrowers with modified mortgages fell back into default despite modifications made to help them stay ahead on payments, U.S. Comptroller John Dugan told CNNMoney.com.

The Office of the Comptroller of the Currency is asking lenders for more details so a new strategy for heading off foreclosures can be developed, Dugan said.

"These answers are important, because they have important ramifications for the foreclosure crisis and how policymakers should address loan modifications," he said.

Federal Deposit Insurance Corp. Chairwoman Sheila Bair said 15 percent of modified mortgages fail again if the interest rates are modified.

"The quality of the modifications are not what they should be," she said.

Bair has proposed extending loans to 40 years or lowering interests to as low as 3 percent to keep mortgages from default, CNNMoney.com reported.