Types of Modifications

First Quarter 2009

New to this report are data on the types of actions taken to modify loans.   While 185,156 mortgages were modified in the first quarter of 2009, 122,398 were "combination modifications" that changed more than one term of the loan.  Of the modifications made in the first quarter of 2009, 70.2 percent included a capitalization of missed payments and fees, 63.2 percent included a reduction in interest rate, and 25.1 included an extended term.  By comparison, 12.6 percent of the mortgages received modifications that froze the interest rate, 1.8 percent included a reduction of principal, and 1.1 percent included a deferral of principal.  All modification actions during the quarter are indicated in the table below.  Since nearly two-thirds of the modifications changed more than one loan term, the sum of the percentages in the table exceeds 100 percent.

The types of actions taken have different effects on the borrower's principal and interest payments and may, over time, have different effects on the long-term sustainability of the loan.

Of the nearly two-thirds of modifications that were combination modifications that involved two or more changes to the terms of the loan, 83.4 percent of them included capitalization of missed payments and fees, 86.1 percent included reduced interest rates, 36.3 percent included extended maturities, 12.4 percent included interest rate freezes, 2.8 percent included principal reductions, and 1.6 percent included principal deferrals.  Additional detail on combination modifications is included in Appendix C.

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