Defaults Rise in Federal Loan Modification Program

We have not been shy about exposing the massive (and unsustainable) bubble of credit being blown into the economy via Student Loans from the government. We have not been afraid to note the dramatic rise in delinquencies among these loans - and the implications for the government.

The growing debacle that is the US student loan bubble - nearly the same size and severity as the Subprime crisis at its peak- has been painfully dissected on these pages in the past, so at this point the only thing remaining is to keep track of the bubble growing exponentially in real time as it hits all time records, and eventually pops.

A rising number of Americans are defaulting on federal student loans shortly after payments come due, fresh data show, continuing a trend throughout the recession and weak recovery.

AP - Loans backed by the Federal Housing Administration will be eligible for payment reductions similar to the Obama administration's loan modification program, the government will announce Thursday.

Chart showing loan default rates for real estate, consumer and agricultural loans for 1998 to 2009 by the Curious Cat Investing Economics Blog, Creative Commons Attribution, data from the Federal Reserve. As you can see real estate default rates exploded in 2008.

A high percentage of owners who take part in the Home Affordable Modification Program are unable to maintain their loan mods, data show.Financially strapped homeowners who are close to foreclosure may want to face the music now rather than continuing to struggle with their monthly payments.

New federal loan modification program is aimed at troubled borrowers.

The Obama administration is expected to outline its plan to curb home foreclosures on Friday. The new program would allow those who owe more on their mortgages than their house is currentcy worth to get new loans backed by the Federal Housing Administration.