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.
Foreclosure is an intimate concern among families. It affects their lifestyle, standard of living, and their future. It is no wonder that when people hear about foreclosure stories, they cannot help but emphasize with the evicted homeowners. There are even cases when viewers are outraged in the circumstances surrounding the eviction. Whatever the case, it is clear that foreclosure has become a big problem in American society.
In addition, aside from being a personal problem, foreclosure is also a social problem. For instance, areas that have a high foreclosure rate tend to experience a more drastic decline in home prices compared to other areas. Unoccupied homes also become a target among the homeless seeking some shelter. It destroys communities as well as the relationship among neighbors as people put their guards up. Some interesting news, stories, and developments about foreclosure are below:
Bill Shrink Guy @ Shrinkage is Good uploaded a compilation of disturbing news in his post, “10 Outrageous Foreclosure Stories.” Among the stories he compiled include one about a home that was foreclosed about the couple was scammed by Bernie Madoff. The house was turned into a party pad by a Wells-Fargo executive. There was also a story about how one woman committed suicide while another poisoned the kids.
Katie Lopez @ Valley Central posted an article titled “McAllen Seeing Increase in Foreclosures”. The revelations outlined in the article are not at all surprising. With the economic crisis still not completely resolved, more people are losing their homes. It also featured several stories about real homeowners who faced foreclosure.
If you are looking for some inspiring stories, then the blog Man vs. Debt might be the right one for you now. Adam posted an article, “How I Paid Off $15,000 in 9 Months by Selling My Stuff on Ebay”. Although the article is not exactly related to foreclosure, it might as well be. After all, the amount he raised is enough to pay off the mortgage and head off foreclosure for many households.
The President’s housing plan could not have been announced at a better time. Obama’s stimulus plan was just signed into law and the stock market fell close to its lowest point in over 6 and a half years! The Fed also said the unemployment rate could jump to as high as 8.8% in the next year. We need more from the administration to fix the worst financial crisis in nearly 80 years.
Many questions still surround the announcement of the plan. Is the housing plan the additional boost we need? Will it allocate enough money to truly fix the foreclosure rate? Will this three-part plan really save close to 9 million American homeowners?
What Obama’s Housing Plan Does
- Makes it easier to refinance: the plan changes the guidelines that used to give people only 80% of the home’s value; the new plan now gives people the ability to borrow up to 105% of their home’s value.
- Gives the lenders reason to modify the loans: the government will take on part of the loss the lenders would face if they refinanced. This will affect the home owner’s debt to income ratio. The goal is to get this ratio to below 31%, with the government paying part of the difference.
- Maintains Credit Flow: the treasury and Federal Reserve will continue to buy mortgage backed securities. This will maintain liquidity, ultimately freeing up capital and credit.
The short and long term objectives of this housing plan seem clear. Bringing down the interest rates of mortgages through loan modification will put more money in the hands of millions of consumers. Given this governmental aide, it is important that the citizens of America acknowledge that we too play a role in the solution. This is where our President called on us to change our ways. This is why he said “the party is over.”
We have to take it upon ourselves to be sure that we are smarter with how we now use the money we save from the mortgages. Yes, people will buy more with the extra money, activity that we need to boost our economy. Hopefully they will have learned from past mistakes and will begin to put the money away. We need to change our ways a as whole. This in turn will also help our economy get back on its feet.