Borrowers are still falling behind after loan modifications

More than half of homeowners fell behind on mortgage payments in the first six months after their loans were modified earlier this year, new data from the Office of the Comptroller of the Currency and the Office of Thrift Supervision show.  This is due to lenders not doing enough to lower their payments.  I don’t know the exact rule of thumb but I believe they only leave you with a cushion of $200-300/month in discretionary income.  That is just asking for trouble.  They use your net income minus all expenses including groceries, gas, etc unlike a mortgage where they use gross income, your mortgage(s), and what is reported to the credit bureaus (credit cards, car loans, student loans, etc).  The bottom line is that banks need to lower borrower’s debt to income more than they currently are.