Record Level Foreclosures!

Real Estate and Mortgage analysts predict the numbers have yet to reach their highs.

The first quarter of 2007 has proven to be a new record for foreclosures. The previous record was, unfortunately the last quarter 2006. According to the Mortgage Bankers Association, the stress and concerns of the housing markets are continuing.

What is even more concerning is that most analysts believe we will see this trend continue into 2008? Delinquencies and foreclosures are rising as borrowers are having more and more difficulty making their payments. The majority of these problems are tied to the adjustable rate, exotic option ARM’s and the interest-only loans as these loans reach their first payment adjustments and the resulting house payments jump often as much as 50%.

The other factor is for borrowers that financed 95% to100% of their purchase (whether fixed rate or adjustable rate programs) putting little or no down payment into their purchase. In the majority of the country, the real estate values have remained stagnant and in many, are declining. When these borrowers want to refinance, get home equity loans or even sell, they are finding that they don’t have enough or any equity… even enough to pay the selling costs if they were to try and sell.

The states with the highest foreclosure and delinquency rates are California, Florida, Arizona and Nevada. Next are the northeast states. Next are mostly the larger metropolitan cities throughout the country, including the mid-west where there have been mounting economic and job issues.

One positive in all this and may help to curtail and restrain the foreclosure numbers is the ability and willingness of lenders (loan servicers) to renegotiate or lengthen the term of the loan for those borrowers that do fall behind. That is a double-edged sword though. On the one hand, it is a definite plus for the borrower that needs help. Unfortunately, it can also simply delay the inevitable.

The other side is that it doesn’t give the market a true indication of the health of those markets. Lenders are also accepting short-sales (when they will accept a lower payoff for a sale than is owed on the property) and often times this is a better option for that borrower where even extending the term of the loan if their own personal financial picture isn’t likely to improve dramatically.

If you are one of the borrowers that may be reaching the point of becoming delinquent on your mortgage, don’t ignore the problem and hope for the best. You are best to contact your lender ahead of serious delinquency and beginning the process of discussing alternatives. The lender will be much more willing to assist you if you reach out to them for help early. The later in the process, the more difficult it is to work with you.

Remember… the lender DOES NOT WANT YOUR HOUSE! They would rather find a way for you to keep it!