14% of Homes Behind on Mortgage Payments, What to Do if Yours Is

According to a new report from the Mortgage Bankers Association (MBA), more than 14 percent of American homeowners with a mortgage were behind on payments or in the process of foreclosure at the end of Sept. 2009. This percentage, which was announced on Thursday, Nov. 19, 2009, sets a record-high for the ninth straight quarter and unfortunately could spell problems for the already troubled economy.

Why is the Rate Increasing?

According to the MBA, the reason many people are falling behind in their mortgages is not because of shady loans – 33 percent of new foreclosures are coming from traditional fixed-rate mortgages, while only 16 percent come from subprime loans -instead they have everything to do with lost jobs. With unemployment at a record high, it’s just too difficult to keep up with payments. According to MBA, about four million homeowners were in foreclosure or at least three months behind in September, resulting in too many foreclosed properties being dumped on the market.

Unfortunately, abandoned or foreclosed homes are said to only plunge prices lower.

What Can You Do if You’re in Foreclosure

According to the MBA, if borrowers can stay in their homes, it could benefit the market, economy, and of course the homeowner. If you’re falling behind in your payments, here are a tips from the Federal Trade Commission (FTC) to avoid losing your home:

  • Consider the Making Home Affordable Modification Program (HAMP): You may be eligible for this loan if your home is your primary residence, you owe less than $729,750 on your first mortgage, you obtained your mortgage before Jan. 1, 2009, your payment on your first mortgage is more than 31 percent of your current gross income, and you can’t afford your payment due to a financial hardship (lost job, medical bills).
  • Talk to your lender about a forbearance: You lender could reduce or suspend your mortgage payments for a period if you can’t make them. First, it is necessary to calculate your mortgage rate using a mortgage calculator to determine what your rate is.  You could then resume making your regular payments, plus additional payments to make your loan current. Talk to your lender for more information.
  • Talk to a counselor: Another option you have is to talk to a counselor with a housing agency who might be able to assess your situation and go over your options with you so that you could more easily speak with your lender.

If you don’t want to lose your home, there are options out there. So before simply walking away, it’s worth it to try the above tips.