Home Mortgage Defaults on the Rise
Posted 04/06/09
Home mortgage foreclosure rates increased 30 percent in February when compared to the same month in 2008. Both home mortgage delinquencies and foreclosures are at the highest points the Mortgage Bankers Association has recorded since they began keeping track in 1972. Unemployment was at 8.1 percent in February. Home values continue to decrease in many areas of the country. Buyers in large part seem hesitant to jump into the ailing housing market, in spite of the announcement of a new $275 billion government stimulus plan. President Obama has made it clear that he plans to help homeowners before they get in trouble and have to go into foreclosure.Some homeowners who took on a home mortgage that was well within their means and have made all their payments on time, are angered that taxpayers have to pick up the tab for irresponsible borrowers who bought more than they could afford. The Obama plan, which designates $75 billion to help ease home mortgage payments for troubled consumers, claims to help all homeowners in the long run. The argument for helping troubled homeowners is that home values will be driven down if neighborhoods that have many foreclosed properties. Communities will deteriorate, as more and more people lose their homes. It is, therefore, in the best interest of all homeowners that their tax dollars are put toward helping people stay in their homes and keeping the community together.
To qualify for a home mortgage modification under the housing aid package, a homeowner must meet certain criteria. A home owner must own the property and occupy it as a primary residence. The home mortgage must have been established before the beginning of 2009. The home owner must have experienced some event that led to financial loss, such as being laid off or a decrease in pay that will prevent him from making his payments. Lastly, it must be determined that the current home mortgage bills each month are greater than 31 percent of monthly earnings. This bill will not allow everyone to stay in their homes. Those who will clearly not be able to make their home mortgage payments, in spite of loan modifications, may have to go into foreclosure. Only time will tell if giving home mortgage modifications to troubled borrowers will be enough to help drastically reduce the rising rate of foreclosures and delinquencies. Responsible homeowners who have and will continue to pay their bills on time will be aiding some irresponsible consumers, but many analysts fear that doing nothing would be more catastrophic for the already ailing housing market.