Sheila Bair, Chairman of the FDIC indicated that there’s still distress in the Mortgage market, to be sure. But loan modifications are having a positive affect. Typically people are willing to stay in their homes and honor commitments even if they are in a state of negative equity. The cases when homeowners are more likely to walk away from a mortgage are when they fall on hard times due to personal issues, like a lost job, or health problems. Loan modifications are not going to be the source of the larger economic recovery but they seem to be enabling troubled homeowners to ride the apparent rising tide of the economic stability.

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