In August reports say mortgage delinquency rates were at an all-time high for homeowners and many believe unemployment is to blame. Over 7.5% of home owners were close to or over a month late on their mortgage payments and with growing unemployment mortgage delinquency rates don’t look to be lowering anytime soon. In fact, the trend for mortgage delinquency rates for homeowners is on the rise for the last few months as people find it more and more difficult to make mortgage payments.
Mortgage delinquency often leads to defaulting on mortgages, which is becoming a problem as well, since most homeowners who default are given loan modifications but are forced to redefault due to not being able to keep up with mortgage interest rates or simply unemployment causing a complete loss of income. Read more about redefaulting here.
The problem with the housing market and homeowner’s high rate of mortgage delinquencies stems solely from the job market and with delinquencies growing in the subprime market and the prime market it looks as if the rate of mortgage delinquencies could continue growing until 2010 unless the job market turns around and employers begin hiring again.
Banks are hesitant to make home loans with the uncertainty of whether or not homeowners will be able to pay their mortgage payment or become delinquent. With the cash flow tight in our nation and businesses still wary of hiring, things look to be at a standstill.
However, proposals before congress are addressing these issues and are looking at ways to create loan modifications that would prevent mortgage delinquencies and allow homeowners to keep their homes and afford the payments while riding out the unemployment problem that is spread across the nation. Many banks are advertising loan modifications and lower interest rates right now so if mortgage payments are becoming difficult it may be time to look into modifying your loan, because both homeowners and banks realize that in the economy today more delinquencies and defaults on mortgages are of benefit to no one.
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