(Reuters) - Loan modifications, which are becoming more popular as
lenders try to restore regular payments from record numbers of
delinquent borrowers, can benefit bondholders, who are spared
losses from foreclosures, Fitch said. But modifications also
mask a delinquent loan's underlying status at a time when its
quality will decide if reserves are needed anymore, it said.
Under a loan modification, the lender and loan-servicing
company change the mortgage terms to make it more affordable
to the borrower. Modifications are gaining favor from
regulators and lawmakers, and are expected to be used more
often as trillions of dollars of mortgages are slated for rate
increases later this year and in 2008, analysts said.
Read more at Reuters.com Bonds News
lenders try to restore regular payments from record numbers of
delinquent borrowers, can benefit bondholders, who are spared
losses from foreclosures, Fitch said. But modifications also
mask a delinquent loan's underlying status at a time when its
quality will decide if reserves are needed anymore, it said.
Under a loan modification, the lender and loan-servicing
company change the mortgage terms to make it more affordable
to the borrower. Modifications are gaining favor from
regulators and lawmakers, and are expected to be used more
often as trillions of dollars of mortgages are slated for rate
increases later this year and in 2008, analysts said.
Read more at Reuters.com Bonds News
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