There is good news and bad news in the mortgage industry. The good news is that the rate at which homeowners lag behind on their mortgage has slowed down for the third consecutive quarter. The bad news is, the delinquency rate has hit another record high overall.

For the third month ending September 30, it is estimated that 6.25 percent of mortgage loans within the United States were 60 days or more past the due date. Based on the TransUnion finding, the figure is up 58 percent from 3.96 percent just last year. This figure is quite alarming because being overdue for 2 moths is usually the initial step towards foreclosure since the amount of money necessary to keep up is beyond the capability of most families to save.

The increase from the second to the third quarter wasn’t as high as the 11.3 percent rise during the first to the second quarter though. In addition, it is a lot lower than the 14 percent leap in the quarter before that. The slowing rate of delinquency is seen as a positive sign. However, the fact that there are still too many foreclosures out there shows that the industry is still problematic. According to F.J. Guarrera, the TransUnion VP for financial services, the firm doesn’t expect the figure to improve until the middle part of 2010.

It is also important to note that certain areas are hit harder compared to others. For example, Nevada has the highest rate of delinquency at 14.5 percent which is up from 7.7 percent last year. Another struggling area is Florida with a delinquency rate of 13.3 percent.

There are two factors that need to be resolved before mortgage delinquency rates goes down to a manageable level: unemployment and home values. Unless these two crucial aspects are improved upon, delinquency rates will take longer to resolve.

It is possible that the government might have overpaid a number of banks during its initial rescue attempt of American International Group (AIG). The company was in such big trouble that the Federal Reserve Bank of New York – previously headed by Treasury Secretary Tim Geithner – that the US government had to wind down its relationships with business partners.

The Federal Reserve Bank had paid the full face value of securities so that these businesses would cancel the insurance handed out by AIG. This was an attempt to relax the AIG’s liquidity trouble. However, reports leaked that at least one company had offered to cancel the contract at less than its face value. According to Neil Barofsky, the Special Inspector General, what it means is that the government might have paid billions more than what was necessary to cancel debt insurance contracts.

Why Was AIG Bailed Out at Any Cost?

Despite these findings, some analyst cannot blame the actions of the Fed during the crisis. AIG is too interconnected with other financial and non-financial firms that its failure could push the global banking system over the edge. As it neared collapse, officials decided to step up and bailout the company with billions of dollars and government guarantee to prevent a deepening of the crisis.

Whether the bailout is good for the long-term future of AIG and the government remains to be seen. This is because after several bailout attempts, the company now holds up to $180 billion in government commitments. The Treasury Department owns about 80 percent of AIG.

The Government Still Getting Some Criticisms

Critics though aren’t content with the government’s actions. They note that AIG’s trading partners knew full well what risks they are taking when they got insurance for credit-default-swaps. These partners showed willingness to take risks based on these actions. They should have been forced to take than 100 percent value of their contracts.

Neil Barofsky said that taxpayers are unlikely to recover the money infused into AIG.

A lot of people make financial mistakes that they wish they never committed. However, making unwise decision is a fact of life and individuals need to deal with the consequences of their action. Financial mistakes are usually reflected in a person’s credit history. It will enable them to take loans from banks and other institutions at a reasonable price.

Financial know-how should start when a person is quite young. The problem is, young people usually don’t know what their getting into when it comes to spending. That’s the reason why there is a recently passed policy that stops credit card companies from issuing cards to individuals below 21 years of age or until they can show proof of income. Young people with co-signers who can vouch for them can also apply for a credit card. In this week’s weekly round-up, we compiled a list of blogs that talks about the new regulation, provides tips on how to start your credit history right, and how to fix the financial mess you got yourself into:

Mary @ Mint Life updated readers about what’s happening in the credit scoring industry in the blog post “Reading, Writing, and…Credit Scoring?” The article is focused on helping kids develop their financial sensibilities to make better choices in the future. Aspects of money management for kids such as opening a savings account are discussed. In addition, kids today face more challenges because of the financial crisis so their credit score is more important than ever.

Ryan @ The Better Credit Blog wrote an article titled “10 Ways to Get the Upper Hand When Dealing with a Debt Collector”. It is a fact that most people experience being at the end of the phone line when a debt collector is calling. This situation is difficult for most people and this article talks about the issues people need to deal with. For one, collectors are trained to play with your feelings and emotions. Look at the call at this light to get an upper hand.

Finally, Ilyce from Think Glink posted the article “Credit Reporting Agencies and Your Debts”. It basically sums up how credit reporting agencies come up with your credit score. It is written in a Q&A format and provides some relevant information for readers.

It has been stressed many times over by the Federal Trade Commission (FTC) and many consumer-advocacy organizations: credit reports should be, and is, free. Despite their efforts though, there are still a number of unscrupulous companies that want to seek to abuse consumers. These firms also divert consumers away from a government-backed site where they can get easy access to their free online credit report.

Even one of the credit bureau, Experian, has gotten the ire of FTC because of their Freecreditreport.com. The site has been under the FTC’s watch for some time now because they mislead people into believing they need to pay a certain fee to get their credit report. Additionally, another one of their tactic is to use the report as bait so that people will sign up to the $14.95 a month service that alerts members to changes in their status.

The government itself has not taken an active stance in discrediting the service, which is fast becoming a $1 billion niche. Currently, the biggest player in this niche is Experian. The company’s market share is over twice that of its three competitors. Experian spent $54 million on television advertising to attract the attention of this market.

The main issue with credit monitoring services is that most don’t actually need it. Most people who have signed up often do so unwittingly. Basically, all a credit monitoring service will do is provide consumers with updates about their credit files. While the service can be beneficial for identity theft victims, it is only a waste of money for the vast majority. Most individuals don’t modify their accounts drastically, and when they decide to, they are typically aware of what it will do to their credit rating. If any errors occur on the report, checking it and reporting to the appropriate credit bureau is often enough.  The greatest use for these monitoring services that I found was when I was taking actions to improve my credit score.  I was able to monitor my progress and see how my actions directly impacted my score.