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.

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.