Obama’s Mortgage Rescue Plan: Half of ‘rescued’ borrowers still default

Is Obama’s Mortgage Rescue Plan another example of throwing good money after bad? 53% of borrowers with loans modified in the first three months of 2008 and 51% of those with loans modified in the second quarter could not keep up with payments within six months, according to U.S. Comptroller John Dugan, who spoke at a housing conference.

Paul Willen, an analyst for the Federal Reserve Bank of Boston, said too many borrowers simply cannot afford to own their homes. “Many of the people in the foreclosure process are in deep, deep trouble. They are not a modified loan away from financial happiness,” said Willen. “Many people who are heading into foreclosure don’t need a modification, they need an exit strategy.”