A new study suggests homeowners who receive mortgagemodifications are more faithful on other loans even if they laterdefault on the original mortgage loan modification agreement,according to TransUnion, one of the three nationwide credit bureaus.

This improved performance occurred despite the fact that nearlysix in 10 mortgage modifications went 60 or more days delinquent 18months following the modification date, the credit bureaureported.

“The purpose of this study was to learn how consumers performedon other loans opened following serious mortgage delinquency, andwhat impact mortgage mods might have on that performance. To dothis, first we needed to determine the outcome of certain mortgageloan modification programs,” said Steve Chaouki, group vicepresident in TransUnion's financial services business unit.

“Our results found that about four in 10 consumers remainedcurrent on their mortgages 18 months after modification,” Chaoukisaid. More generally though, TransUnion found that consumers with amortgage mod performed better on new loans originated after theirinitial mortgage default than those with no mods.

“In the 12 months after new loan origination, consumers with amortgage mod had an average 18% lower delinquency rate on newcredit cards than those with no modification, and a nearly 50%lower delinquency rate on new auto loans,” Chaouki said.

Within the population of modified mortgages, certainsub-segments of borrowers performed relatively better followingmodification, TransUnion added.

In particular, the study compared borrowers who had previouslygone delinquent only on their mortgages – but no other loans – tothose borrowers who went delinquent on other loans as well as theirmortgages. The 12-month recidivism rate for mortgage-onlydefaulters was 38.8%, while the recidivism rate for multipledelinquency borrowers was 46.2%.