Study: 98% Of Loan Mods Reviewed Resulted In No Reduction In Principal Balance; No Monthly Payment Reduction In Nearly 50%

In Washington, D.C., Financial Week reports:

• Mindful that the foreclosure crisis may be at the root of Wall Street’s meltdown, the House Financial Services Committee today reviewed new evidence that the housing industry’s efforts to modify struggling homeowners’ mortgages aren’t working. An academic study by Valparaiso University law professor Alan M. White, a member of the Federal Reserve Board’s consumer advisory council, found that banks working with distressed homeowners to modify their mortgages had failed to reduce the principal balance in 98% of the 4,300 cases studied. Nearly half the loan modifications did not even reduce the monthly payment amount.

For more, see Mortgage modification programs have failed, lawmakers say.

Professor White's prepared statement to House Committee on Financial Services.