Mortgage Mods: Most Borrowers Are Likely to Redefault Within a Year

Mortgage modifications may not be the solution to the nation's housing problems, after all. Fitch Ratings predicts that 65 percent to 75 percent of modifications on subprime mortgages will redefault in 12 months. The redefault level predicted for prime loans that have been modified is slightly lower -- 55 percent to 65 percent within 12 months of modification.

Along with foreclosures, the use of short sales and short payoffs increased in 2009, according the the recent report from Fitch. "Currently 50 percent of prime and 35 percent of subprime and Alt A distressed liquidation sales are not by REO [lender-owned] sale," according to Fitch. The percentage of loans that ended up in foreclosure was 25.7 percent by the end of 2009, up from 11.7 percent in the first half of that year.

All those statistics show how little can be done to help people as long as the job market continues to be weak.