As the loss in jobs rise, increasing numbers of home owners whose credit was once very solid and stable, are finding themselves behind in mortgage payments, which has served to exacerbate the growing problem of mortgage foreclosures.
The latest in a long line of national real estate disasters has shifted, and not in a positive way.

The shift has been from those who were initially borrowers whose credit was shaky, to those who were considered a prime lending consumer, with a good financial history.
Economist are currently predicting that the unemployment rates will continue to rise, going into double digits expect that the foreclosures will continue to escalate, increasing the losses to America’s financial system and an even broader aspect of the economy.
“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”
“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”
Incredibly, those who are on a fast track to foreclosure today are more frequently the buyer who has a loan that actually fits their income, as opposed to those who had overstretched their credit with lenient mortgages such as was previously the case.
The experts say that more than sixty percent of the mortgage defaults in 2009 will be brought about by the unemployment, which is up almost thirty percent from 2008.
Buyers whose businesses depended on other business that is currently in trouble, will find themselves out of work and finding work in the same arena in which they are suited is not always an easy task.
Many of these buyers will work with their banks in an attempt to cut payments and work out a feasible solution but more and more, bankers are unwilling to consider other options aside from foreclosure.
From November of last year, until February of this year, 2009, the number of what are considered prime mortgages that were more than ninety days past due or were in preforeclosure increased more than 473,000, and now sits as well over 1.5 million in number in the United States. The total amount owed by these buyers is more than 224 billion dollars all things considered.
A program which was announced in February by Obama’s administration permits the government to spend about 75 billion on mortgage servicing company incentives that may help to lower payments for those home owners who are in trouble and may assist about four million homeowners, preventing foreclosure on their homes, however now, more than three months after the fact, that program seems to be less than a quick fix as it was touted to be.
A spokeswoman from the Treasury Department states that the number of loans modified under this program was “more than 10,000 but fewer than 55,000.”
In the first two months of2009, an additional 313,000 mortgages ended up in foreclosure or became more than ninety days delinquent,  according to First American CoreLogic.
“I don’t think there’s any chance of government measures making more than a small dent,” said Alan Ruskin, chief international strategist at RBS Greenwich Capital.
Among the prime borrower increases, those foreclosure rates are growing the fastest in the states which have some of the higher unemployment rates, including California, Nevada and Minnesota, while borrowers are having trouble persuading their mortgage companies or banks to work with them to reduce their payments and prevent foreclosures on their homes.
In a struggling economy, with unemployment on the rise, it appears that the banks have not yet gotten on board and begun to work with consumers instead of against them in an effort to save both mortgage company and consumer time, effort and money.

Problem Signs that you Can’t Ignore
Are you having trouble keeping up with your Mortgage and Loan payments?
Have you received a notice from your lender asking you to contact them?

What you should do
* Don’t ignore the Notices from your Mortgage Lender
* Contact your Mortgage lender as soon as you are able, Prepare a list of things you can say to them
* Contact a HUD-approved Housing Counseling Agency Toll FREE (800) 569-4287

1. Whatever you do, Don’t ignore the problem.

The further behind you become
the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your Mortgage lender as soon as you realize that you have a problem with Making the Payments.

Lenders do not want your house. The Governmetn will be helping them to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you through financial problems. Or important legal action. Your failure address the issues will not help you in foreclosure court.

4. Know your mortgage rights.

Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

6. Contact a HUD-approved housing counselor.

The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287

7. Prioritize your spending.

After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage.

8. Use your assets.

Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

Options for walking away from Your Home Loan

With the value of your home decreasing and costs of everything else going up, it can be difficult to figure out how you are going to pay your loans.  While the Obama administration has helped some people, there are still millions who do not qualify due to the decrease in value their home.  Thoughts about how to pay your mortgage can be scary.

Years ago, giving up on a mortgate would have been unthinkable.  However, with economic bad news hitting us at every corner, that is exactly what some people are doing.  It never hurts to talk to your lender to see about other options first.

However, if there are no other options, you most likely won’t be subjected to any lawsuits.  The government should not tax you either.  Finally, although your credit will be damaged, it should be reparable. 

One option available to you is to try for a short sale.  Work with the lender to see if you can sale at a price lower than the mortgage amount.  Another option is a “deed in lieu” where you give the lender the deed to your home and in return the lender agrees not to start the process to foreclose on your home. 

You can simply threaten to stop paying on your loan.  The number of people who are hurting financially is overwhelming the banking industry, making it more palatable for a lender to determine a resolution which is mutually beneficial.  The cost to lenders can simply be too much to go after somebody who cannot afford to pay. 

Different states can have different rules regarding when lenders can go after borrowers for the balance due on their mortgage loans after foreclosure. 

A good rule of thumb is to discuss the laws of your particular state with a lawyer.  You can also include a lawyer in any short sale, deed in lieu, or the foreclosure to additionally protect yourself. 

Besides having a lender potentially pursue you, you also need to be careful of Uncle Sam. Forgiven debts can often be counted as taxable income.  If you must sell your home through a short sale or opt for the deed of lieu, take a look into using special tax form 1099-C.  Some states have passed laws that are similar to national laws, so check with an accountant.

The damage to your credit can last up to seven years, but the extent of the damage also depends on how you have been able to pay other lenders.  If you are looking to rent a property, you should easily be able to qualify as long as walking away from the mortgage was the only event damaging your credit. 

Due to the staggering number of people who have had their homes foreclosed, lending institutions have been working to remove the stigma that has been associated with home foreclosure.  Keep a cool head and an optimistic attitude and you can weather out the current economic storm.  

Will the government mortgage help plan stabilize the housing market Obama has some new sweeping government mortgage initiatives that will assist new home buyers and help those whose mortgages are more than they can currently bear financially. The broad spectrum hopeful fix will use money from the government to help subsidize the rates and assure that the lenders don’t fall prey to the falling prices of homes.

The plan, about 75 billion dollars worth, has several facets and will allegedly assist about 9 million borrowers who are suffering from the falling prices of homes and monthly payments that are astronomical in nature. The foreclosure fix is a steep departure from that of the Bush era politics which relied for the most part on having the lender modify their rates for mortgages that were in trouble. Obama’s plan, it is said will make it easier for the home owner to afford their monthly payment by refinancing the mortgage,as well as putting in billions of federal dollars into tempting those companies to modify the loads of the people who have already stopped their mortgage payments nationwide. IT is being said the program, while voluntary in nature, contains a mingling of both carrot and stick, temptations for the loan servicers and investors, as well as offering a big stick on the guise of working with Congress to permit judges to modify the mortgages of those who do fall behind before the borrower has lost their home. This is a step that the community believes is a good step toward assisting home owners financially to keep their equity in their home, but is not well received by the financial community.

Obama, in a speech in Mesa Arizona, a community which has been quite hard hit by the financial and mortgage issue. . . “In the end, all of us are paying a price for this home mortgage crisis,” Obama said. “And all of us will pay an even steeper price if we allow this crisis to deepen — a crisis which is unraveling homeownership, the middle class, and the American Dream itself. But if we act boldly and swiftly to arrest this downward spiral, every American will benefit.” The act, which is being hailed by Democrats could conceivably reduce the numbers of people who are losing their homes, but with strict limitations, could also be problematic. The Republican party however decries the cost of the bailout, saying it will cut into the pocket of every man woman and child in America.

Obama Administration Rescues Homeowners

With bills piling up and wages staying the same or decreasing, homeowners are wondering where to turn.  Thankfully, the Obama administration has come to the rescue with loan modification and refinancing programs.  Lenders and borrowers have new incentives as Obama races to stall the flood of foreclosures.

To determine if you are eligible, you can go to their website, MakingHomeAffordable.gov, which asks you a few questions.  The goal of the Obama administration is to help 7 to 9 million people reduce their mortgages and save their homes from threat of foreclosure.  The two main programs are the Home Affordable Refinance Program and Home Affordable Modification Program.

The Home Affordable Refinance Program provides assistance to up to 4 to 5 million homeowners which are owned by Fannie Mae or Freddie Mac.  It allows them the chance to refinance their homes to bring down the cost of their monthly payments.   It can also help by changing the homeowner from a risky adjustable rate mortgage to a more stable one.

The Home Affordable Modification Program has set aside $75 billion with the intention of helping millions of Americans avoid foreclosure.  A borrower participating in this program will find plenty of incentives to keep payments current.  For example, a borrower can get up to $1,000 pay-for-performance, which goes directly towards paying the principal of the loan.

However, as helpful as the MakingHomeAffordable.gov site is for seeing if you are eligible for one of the programs, qualifying for a loan modification is too complex to be written into any one software system, so you should discuss options with a professional.  A mortgage servicer or a housing counselor can provide assistance even if the website declares you are not eligible for assistance.

If your mortgage is owned by Fannie Mae or Freddie Mac, you can make use of the portion of the site which walks you through a series of questions to see if you qualify for refinancing.  Payments on your mortgage must be up to date to take advantage of refinancing.    If you’re not sure if your mortgage is owned by Fannie Mae or Freddie Mac, use the site to find out.

To get the maximum benefit, be sure to double-check required fields, such as address and social security.  Remember the saying “garbage in – garbage out”, your results are more accurate if you can provide accurate information.

Even if the site says you are not eligible for assistance, you can talk to a counselor approved by the Department of Housing and Urban Development.  If you are already behind on your payments and require help right away, you can reach a counselor by dialing 1-888-995-HOPE (4673).

The website contains a helpful checklist to go through before contacting a counselor and also contains helpful advice to avoid foreclosure rescue scams.

Owning your home is part of the American dream.  You have worked hard for your home, don’t give it up without a fight.  You have resources you can use to save your home, so make good use of them.

Obama’s Plan for Government Mortgage Help

With the election of our new president comes a promise of solutions to many problems. The Obama administration is working hard to live up to their expectations, which are set extremely high and for good reason. This country is hoping that Mr. Obama will be able to put an end to the economic rut we seem to be in and within his plans for change, that overall goal remains the same in everything he and his administration chooses to do.

Obama’s plan to fight the unbelievable rise in home foreclosures aggressively has been thought about and re-thought about by the administration and now it’s only a matter of choosing a strategy and course of action before setting a plan into motion.
Among these various plans is a plan affecting mortgage rates directly. In this plan, there is a proposed freeze on foreclosures for six months, in which time foreclosures will come to a halt. Meanwhile, the plan is to double the deduction that is happening on interest rates among mortgages nationwide and even a tax cut for those who buy homes rather than renting. That’s only the beginning too, the federal government would also be beginning a federally sponsored refinancing program that hopes to create help when it comes to refinancing your home.

Two years after the beginning of this foreclosure spike the government officials have been debating on which plan could possibly work. In these two years they haven’t been able to choose a plan primarily because they haven’t decided how losses among lenders and borrowers should be fairly divided. The new administration is admit about changing the foreclosure problem in the nation however they still haven’t decided how this should be done in order to benefit both parties and do not want to create an uneven divide.
According to most, the biggest challenge is in fact going to be coming up with a government mortgage help program is going to be finding a plan that can help to refinance without making any irresponsible parties suffer for the losses. It’s important that we realize however that whichever route they choose to go, this plan is not meant to help all “mortgage crisis.” As Laurence Summers explained to many congressional leaders in the form of a letter, fifty to one hundred billion dollars will go to this plan, however they are only targeting foreclosures that are seemingly preventable and help those that have a chance to come out of their rut rather than the “lost causes.”
The biggest challenge of these efforts is how they are going to do it. In that we mean, how is the government going to determine the lost causes from the potential rise outs? That is the ultimate question and it is the question that the Obama administration is still trying to solve before releasing their plan on solving the mortgage crisis across the nation. Among these as we mentioned earlier is the tax credit for those who are buying houses which is supposed to be an incentive for responsible buyers to invest in buying a home.

As most of us know, with the induction of the Obama administration into the white house there has been promise for a lot of economic changes nationwide. It is the Obama administration’s goal to help solve some of this economic crisis going on here in America. Part of that economic crisis has a lot to do with home foreclosure and people’s inability to pay their mortgages with the economic meltdown that has been engulfing our economy. The Obama administration has proposed a number of solutions to this problem but has yet to make a confirmed decision on the matter.

They are proposing a number of things, the first of which would be to freeze foreclosure for six months, disabling the foreclosure of homes and hopefully giving people enough time to stand on firm ground again. In doing this, people are expected to come out of their rut and handle the up and coming de-frost with as much responsibility as possible. In addition, the administration is proposing a double in the mortgage interest deductions that we’ve seen thus far among lenders in order to give people the chance to pay back their loan in affordable amounts. Lastly, the government is proposing a possible tax cut for those who are actually purchasing homes as an incentive for some responsible home purchases to help the mortgage companies see a return.
John Burns a home builders consultant with a lot of prominence proposes that the administration gives tax cuts that refund up to fifteen thousand dollars of a home buyers down payment as an incentive to get the borrowing party in the relationship to put up more of a personal stake, in addition it is his idea that if we double the interest deductions it will allow the borrower more spending money and a more disposable income which would not only help prevent future foreclosures, but would also stimulate the overall economy.
These courses of action are supposed to enable the lenders to get their full amount owed back, while allowing the borrowers some leniency to bail them out of losing their homes. Obama himself however has been more specific on one plan to help overly financially stressed borrowers is to allow the bankruptcy judges to lower the overall amount owed on homes by borrowers through an order to the banks. While most borrowers are fond of this plan, long-term lenders everywhere are opposing such a course of action.

Although many lenders oppose this plan, fair housing groups everywhere are boasting of the hundreds of thousands of foreclosures that could be prevented using this method. However with the banks in such financial trouble it is speculated that this may cause further collapse of the economy and while these solutions could be helpful people everywhere including Rosen of UC Berkley are saying that we are headed for trouble regardless of what solutions may be able to help, “Many people will lose their houses anyway,” he said. “They’re just stretched too far.”

The Bottom Line on Budgeting for you Mortgage

What comes to mind when you think about managing your money? If you’re like many Americans, you think about banking.

But it’s more than that. Money management is about being in control of your day-to-day finances, and finding ways to save for your goals.

And that means understanding some basic principles, setting a few guidelines and working on the details.

To get started, we’ll look at how to create and monitor a household budget.
* Where did you spend the last $100 you took out of a bank machine?
* Do you know what it costs you to live each month (to the nearest $50 )?
* Are there bills that surprise you when they arrive?
* Do you have an emergency fund?
* Have you ever had to resort to your credit card because you underestimated how much you had in the bank?
* Do you have to check your bank balance often to see how much money is in your account?

People hate budgets. Well, some people do – many of us just can’t get by without them.
But like them or loathe them, we can all get some mileage out of these basic financial plans.

Trying to get through life without a budget is like trying to drive a car with no steering wheel. You’re always at risk of winding up in the debt ditch whenever you encounter a financial pothole.

That’s because expenses tend to expand to match your income. Think about what you did with your last raise. Did you simply incorporate it into your spending? Now you probably can’t remember ever living on less.

To see if you’re proactively managing your money, answer the following questions. The more vague or negative your responses, the more likely you need a budget.
Write it down

* For the next two weeks, keep a small notebook in your purse or pocket and jot down ALL the items you buy and the amount spent.
* Grab all your bills for the past two years. Divide your expenses into categories. Now add up how much you’ve spent in each category and divide the total by 24 to get your monthly costs. Those are your current expenses.
* For the next two months, make a list whenever you’re going into a store. The next time you buy stuff you didn’t have on your list, think about your spending patterns.

When you do your budgeting in your head, it’s very easy to forget how much you’ve spent. You’re always guessing how much you have left. And if you aren’t sure how much money you have, how do you know how much you can spend?

Take control of your cash management with these first steps:
Drawing the blueprint

* Column 1: Expenses. List your categories – everything from your rent or mortgage payment to your clothing, food, utilities and medical costs. Don’t forget a category for emergency expenses.
* Column 2: Planned. Write in the amounts you’re prepared to spend monthly on each expense.
* Column 3: Actual. Each month, enter how much you really spent on each expense.
* Column 4: Difference. This can be positive (if you didn’t spend as much as you thought you would) or negative (if you spent more).

The typical budget is made up of two parts: income and expenses.

Your expenses? Well, you just figured those out.

Your income? This is how much you bring in regularly: your salary, dividends, commissions, alimony, child support and/or pension. It doesn’t include money you might get. So if your bonus isn’t guaranteed, it doesn’t count.

Add these figures up and you’ll have your total income (i.e.: how much you have to spend each month).

To create the expenses side of your budget, draw up four columns on a piece of paper or a computer spreadsheet. Label them as follows:

Example:
Expense     Planned     Actual     Difference
Rent     $1,000     $1,000     $0
Groceries     $500     $535     $35
Clothing     $300     $180     - $120
Coming out even

If your expenses exceed your income or are much higher than you thought they would be, you’ll have to look for ways to trim your expenses – or bring in more income. But that’s OK – revisions are a necessary part of the budgeting process.

Also remember that a budget isn’t carved in stone. It has to be flexible because life is unpredictable. Defunct appliances, a leaky roof, and a root canal all have a way of cropping up and throwing the best-laid plans off track. Having a “rainy-day” fund can come in handy.

It’s also a good idea to allocate monthly savings for the bigger purchases you want to make in the future. Interested in buying a new car? Make it a priority to set aside a few dollars each month for a “car fund”. You’ll be surprised how far it will go.
Stick to the plan and record everything

If you go off track in a particular category in one month, there’s no reason to panic or throw the budget in the garbage. Monthly overs and unders are far less important than the annual outcome, because expenses tend to fluctuate from month to month.

What’s important is to stick with the process. Your budget shouldn’t be painful, but it should make you aware of how much you’re spending. Then you can decide if that’s really where you want your hard-earned money to go.

[The information in this article is general only; it is not intended as specific investment, financial, accounting, legal or tax advice. Consult a professional before acting or relying on information in this article.]