A new study suggests homeowners who receive mortgage modifications are more faithful on other loans even if they later default 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 nearly six in 10 mortgage modifications went 60 or more days delinquent 18 months following the modification date, the credit bureau reported.

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

“Our results found that about four in 10 consumers remained current on their mortgages 18 months after modification,” Chaouki said. More generally though, TransUnion found that consumers with a mortgage mod performed better on new loans originated after their initial mortgage default than those with no mods.

“In the 12 months after new loan origination, consumers with a mortgage mod had an average 18% lower delinquency rate on new credit 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, certain sub-segments of borrowers performed relatively better following modification, TransUnion added.

In particular, the study compared borrowers who had previously gone delinquent only on their mortgages – but no other loans – to those borrowers who went delinquent on other loans as well as their mortgages. The 12-month recidivism rate for mortgage-only defaulters was 38.8%, while the recidivism rate for multiple delinquency borrowers was 46.2%.