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Modified Loans Often Lead Homeowners Back to Trouble

By VIKAS BAJAJ
Published: December 8, 2008

Most troubled homeowners whose mortgages were modified are again falling behind on payments, a top banking regulator said on Monday, raising questions about whether policy makers and lenders can successfully help them stay in their homes.

Data from banks show that more than half of loans modified during the first three months of the year were delinquent by 30 days just six months after the terms of the loans were changed, John C. Dugan, the comptroller of the currency, said at a conference in Washington. After eight months, 58 percent were delinquent again.

The rate at which borrowers fall behind payments again — called the re-default rate — appears to be much higher than what previous studies have found. In October, a Credit Suisse study showed that about 30 percent of loans modified at the end of last year were delinquent by 60 days within eight months of the change.

Mr. Dugan said it was unclear why the re-default rates were so high after modifications made by the 14 banks that provided data to his office. He acknowledged that “we have to be careful as we look at this data.” One explanation for the high re-default rate might be that banks were not significantly changing the terms of the loans they modified.

Analysts at Credit Suisse have found that modifications that do not lower borrowers’ monthly payments were more than twice as likely to become delinquent again than changes that reduced payments. Banks like Chase, Citigroup and Bank of America have only recently put more emphasis on lowering monthly payments.

Some loans may also be so poorly underwritten that no modification could help the borrowers stay in homes that they can no longer afford, Mr. Dugan said. That would confirm other studies that show homeowners who become delinquent are much more likely to lose their homes today than in the past.

The Morgage Bankers Association said last week that 30 percent of homeowners who miss one payment end up in foreclosure a few months later. Historically, only 12 percent to 15 percent fell that far behind and most borrowers were able to catch up, sell their home or strike a better deal with their lender. In California, however, 75 percent of homeowners who miss one payment end up in foreclosure; in Florida, 65 percent who miss a payment do.

A sharp drop in home prices has made it much harder for homeowners to sell their properties for as much as they owe and rising unemployment is putting more borrowers in financial distress.
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Different Types of Taxi Insurance

Looking at the increasing number of road accidents, as well as vehicle theft, insurance for your vehicle is a must. Getting coverage for a vehicle means that at the time of damage or theft, the company from whom the policy is taken will cover the cost of damages, or will pay for the cost of the vehicle in case of theft. Many of the firms are offering insurance policies on a commercial basis as well, one example being the introduction of taxi insurance in which cover is provided for taxis, cabs and even vans. Private hire insurance policies, as well as public hire insurance policies, are two types of taxi insurance policies available. In comparison to the public hire insurance policy, private hire insurance policies are a lot more expensive as they involve a higher risk.

These types of taxi insurances are very popular these days, as having taxis for public as well as private hire includes a lot of risks, and not opting for any kind of insurance policy will make the running of taxis unaffordable. But one must also be very careful in choosing the company from whom the insurance is obtained, as it is a very specialised field, and very few companies are providing it at genuine prices. Getting a cheap taxi insurance policy may not be a very hard nut to crack because of the competition between the companies.

Obtaining these taxi insurance policies is very easy, as one may register directly over the net or can even consult any executive from the taxi insurance company. The best way to get cheap taxi insurance is to directly get in contact with the wholesale insurance agents as they are well trained and can calculate the minimum amount of premium required to obtain a taxi insurance policy. The prices, or the premium, of the policy is relatively cheap, if there is a good number of a taxis included in the policy. Apart from this, there are three types of taxi insurance policies offered by companies and they are: third party, fully comprehensive, and third party fire & theft.

The differences in these policies are that in fully comprehensive, road risks as well as theft and damages are covered. This is the most expensive of all policies. Third party insurance, being the cheapest of all, doesn’t cover for the vehicle but just fulfils the legal requirement of the government for having insurance cover for a vehicle. Lastly, third party theft & fire covers for the damages of the other party.

Taxi insurance companies are very particular when providing a policy, and don’t provide it to drivers who have been found drunk or in possession of drugs at the time of driving. Moreover, if they are ever found guilty of any kind of crime, the same applies. But still these companies, in spite of being strict, in some cases provide a policy at higher premiums only if all the formalities are met by the driver or the customer.

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Source: http://www.articlealley.com/article_707191_19.html