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The S&P study also says that the "overhang" of foreclosed homes expected to go on the market points to lower home prices.
Some borrowers are catching up on payments after having their loan terms modified, but S&P says current trends suggest that 70% of such borrowers eventually will redefault.
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Associated Press A 'sold' sign is partially covered in snow in Omaha, Neb., in December.
Loan modifications "may be helping marginally, but they are not going to solve the whole problem," said Diane Westerback, a managing director at S&P.
Loan servicers, firms that collect payments and handle foreclosures, seem to have "nearly exhausted the supply of plausible candidates for loan modifications" and will find that many loans are "unredeemable," the S&P study says.
As a result, servicers increasingly are looking to arrange "short sales," in which homes are sold for less than their loan balances.
Some borrowers are catching up on payments after having their loan terms modified, but S&P says current trends suggest that 70% of such borrowers eventually will redefault.
View Full Image
Associated Press A 'sold' sign is partially covered in snow in Omaha, Neb., in December.
Loan modifications "may be helping marginally, but they are not going to solve the whole problem," said Diane Westerback, a managing director at S&P.
Loan servicers, firms that collect payments and handle foreclosures, seem to have "nearly exhausted the supply of plausible candidates for loan modifications" and will find that many loans are "unredeemable," the S&P study says.
As a result, servicers increasingly are looking to arrange "short sales," in which homes are sold for less than their loan balances.
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