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.

For our first entry in Wednesday’s Washington Weekly, let’s discuss an issue that has been a topic of conversation in almost every American home-the housing crisis.  Millions of Americans are feeling the effects of the subprime mortgage meltdown.  Many have lost their homes or are currently in danger of meeting that same fate, as they cannot afford mortgages that at one time appeared affordable.  No matter where you want to point the finger-at the lenders, at the borrowers, at the brokers-the next step in this discussion needs to focus on the solution.

So what is President Obama’s proposed solution?  How does our new commander-in-chief propose that we dig ourselves out of this crisis?  Obama’s “Making Home Affordable” plan aims to work with lenders to modify loan terms and to create more affordable fixed-rate loans.  Approximately 4 million Americans will benefit from the modified terms, while 5 million Americans will be granted the more affordable fixed-rate loans.  The 9 million Americans who will reap the plan’s benefits must fall in the category of borrowers who owe up to 5 percent more than their home’s current value.  If you fall into this category, you must submit your most recent tax return, two pay stubs, and an “affidavit of financial hardship.”  The conditions of the housing plan dictate that borrowers will only be allowed to have their loans modified once; furthermore, the loans needs to have been granted on or before January 1, 2009, and must either be backed by Fannie Mae or Freddy Mac.

So how is Washington responding to the fact that the “Making Home Affordable” leaves out the rest of homeowners who owe more than 5 percent of their home’s current value?

Secretary Tim Geithner commented:

“Two weeks ago, the President laid out a clear path forward to helping up to nine million families restructure or refinance their mortgages to a payment that is affordable now and into the future.  Today, we are providing servicers with the details they need to begin helping eligible borrowers.”

This is only the beginning of a plan that will, over time, trickle down to help other Americans caught in the midst of the subprime mortgage crisis.  A crisis of this size, with this much money involved, cannot be solved overnight.  For more information regarding the details of President Obama’s housing plan, visit www.financialstability.gov.

I can hear them crawling out of the woodworks again.  Just like a pest, they smell the lure of the quick money.  Just when you thought the days of the sub prime mortgage broker were over, they are beginning to resurface upon hearing about Obama’s new housing plan.  Even before Obama’s housing plan was announced a few days ago, sub prime brokers began planting their seeds in the television and radio ads along with numerous sites on the Internet.  More and more these website are appearing on a daily basis.

When this financial crisis began to escalate last year, I started to see many more debt settlement companies pop up.  Are these former debt settlement agencies now the loan modification brokers?  It appears that these backroom brokers may be back again, ready to prey on the SAME unfortunate individuals whose upside down mortgages they brokered.

In my first post, I mentioned that one my goals for this blog is to help prevent people from falling victim to the same lending practices that put our economy in the situation it is in today.   Well, here is my first attempt to offer protection in the form of knowledge.

When loan modification first revealed itself, it was sort of hush hush.  Congress was slow to wrap its hands fully around loan modification; as a result it continued, while the majority of the public had no idea.  Advertisements offering “Foreclosure Prevention” and “Foreclosure Avoidance” began to gradually appear.  As banks stepped forward and announced their plans to allow certain mortgages to be modified, more loan modification companies started to appear.

Some of these early loan modification brokers had their clients pay up front costs to renegotiate their mortgages, doing little to nothing to help their clients.  Some ended up being scams, robbing the home owner of the fronted cash.  Even though your bank rewrites the loan terms, the bank still has to outsource the work on a loan, as each case can take up to 12 hours to review.

I guess we will have to see how it all plays out as more and more banks announce that they will modify existing mortgage terms.  I am curious to see how Obama’s new housing plan will protect and deal with the loan modification brokers and business as a whole.

How can you protect yourself?

1.  Always request to see all proposals before agreeing to anything.  This will save you in the long run when rates and terms magically “change.”

2.  Know your home value. Being honest and sharing the exact home value with the lender will save you both time. The lender can only provide you an honest solution if you give them an accurate value.

3.  Know your financial situation.  Be honest about your income.  Always know where your credit stands.  Sign up for credit monitoring or for identity theft protection to make sure companies are not pulling your credit without your knowledge or against your will.  Too many hard pulls by the lender can ultimately change and lower your credit score.

4.  As long as you have you have the right numbers, know your financial situation, and are being cautious with your social security number, it is OK to shop around.  Knowing your options is key for getting the best possible deal.  .