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.

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