FORECLOSURE » Prevent Foreclosures

New data from RealtyTrac, an online marketer of foreclosed homes, showed that almost 3 million homeowners received at least one foreclosure filing in 2009.

According to the marketer, this sets a new record for the number of people falling behind on their mortgage payments in one year.

Data from the Report

According to RealtyTrac, one in 45 households (roughly 2,824,674) nationwide were in default in 2009. That's 21 percent more defaults than in 2008 and more than double the number of 2007.On a brighter note, however, the number of homes that were repossessed was only 871,086, which was only a 1.1 percent increase over 2008.

While the marketer noted that the numbers are higher than ever, they probably would have been even higher had it not been for the efforts of President Barack Obama's Home Affordable Modification Program. Even more, these same efforts are likely to be what resulted in fewer actual foreclosures.

More Foreclosures May Be On the Horizon

Some experts say that while the number of foreclosures may have peaked in July with over 361,000 in that month, there are likely to be more to come. The very modification programs that helped some homeowners stay out of foreclosures may have simply stalled the inevitable for others.

This means that a lot of the foreclosures (filings andactual repossessions)that we didn't see in 2009 have merely been pushed to 2010. Reports show that the majority of those foreclosures noticeshave been and will continue to be in California, Florida, Arizona and Illinois, which have collectively accounted for 50 percent of the nation's properties that received notices.

With the exception of Illinois, the above states aside have also been listed among states with the highest number of actual foreclosures. Along with Nevada with a foreclosure rate of 10 percent, the others have high rates as well (Arizona, 6.1 percent; Florida, 5.9 percent; California, 4.75 percent).

Were you affected by foreclosure in 2009? Tell us your story.

New data shows that 23 percent of homeowners who have mortgages are underwater. According to this data, released by First American CoreLogic - a real estate information company based in Santa Ana, Calif. - this percentage equals 10.7 million households that have negative equity.

Home Prices Continue to Drop

According to data from First American, 5.3 million U.S. households are tied to mortgages that are at least 20 percent higher than their home's value. This is because home prices are dropping at record rates. J.P. Morgan Chase and Co. recently reported home prices won't likely see their bottom until 2011.

Lower home prices force more homeowners into negative equity and according to First American those homeowners who owe more than 120 percent of their homes value were more likely to default. As a result, as home prices continue to lower and more borrowers sink underwater, more will probably be walking away from their homes.

What Underwater Mortgages Do to the Market

Having more homeowners walk away from their homes is a big problem in the housing market. The market is already over saturated with foreclosed and abandoned homes, meaning there are too many houses up for sell. And guess what too many houses up for sale and not enough demand for homes does - it drops prices even further. Ultimately, this means the market is now in the midst of a vicious cycle.

What Are Some Solutions?

There are housing programs out there, like the Neighborhood Stabilization Program that is managed by HUD, that were created to help move abandoned or foreclosed homes off the market and into the hands of low-income families in need of quality housing. However, not every state or community is participating. If you are in danger of losing your home or already have, visit your state's Department of Housing for more information.

Also, there are neighborhood housing organizations out there that may be able to help you make wise decisions regarding your home. Owning an underwater mortgage is definitely a challenge to content with and without help from the government or community organizations, it may be impossible to get back afloat.

Do you currently own an underwater mortgage?

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