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Mortgage Delinquencies Reach Record High

Francine L. Huff
LoanBiz Columnist

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Mortgage delinquency rates were at a record high in the first quarter of 2009, as unemployment continued to take a toll on many households' income. A survey by the Mortgage Bankers Association (MBA) found that:

  • The overall percentage of loans in foreclosure and at least one payment past due was 12.07% on a non-seasonally adjusted basis
  • 3.85% of mortgage loans were in the foreclosure process
  • California, Nevada, Arizona, and Florida accounted for 46% of U.S foreclosure starts.

Problems with Prime Mortgage Loans

Although many recent foreclosures have been linked to subprime loans, the MBA's survey shows that more homeowners are becoming delinquent on prime loans.

"The foreclosure rate on prime fixed-rate loans has doubled in the last year, and, for the first time since the rapid growth of subprime lending, prime fixed-rate loans now represent the largest share of new foreclosures. In addition, almost half of the overall increase in foreclosure starts we saw in the first quarter was due to the increase in prime fixed-rate loans. More than anything else, this points to the impact of the recession and drops in employment on mortgage defaults," said Jay Brinkmann, MBA's chief economist.

Mortgage Rescue for the Unemployed?

People who've lost their jobs are finding it tough to take advantage of the government's mortgage rescue plan. IHowever, if you're still current on your mortgage and know you will be unable to continue with your current monthly payments, you may be able to qualify for a loan modification through the mortgage rescue plan.

If you've already lost your job but have a spouse who works, the income will be considered in a loan modification plan even if only your name is on your mortgage. Any unemployment benefits you receive may also be used as a source of income for a loan modification, Jodi Woodsmith, a housing counselor at Self-Help Enterprises in Visalia, Calif., told the Associated Press.


About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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