Fewer Homeowners Missing Mortgage Payments…But Existing Delinquencies Aren’t Improving
A recent report on mortgage delinquencies could be taken as good or bad news, depending on your financial situation.
New information from credit bureau TransUnion shows that, if the number of borrowers who have missed their home loan payment for a year or more were excluded from the data, the U.S. delinquency rate would be only a little higher than normal, according to USA Today.
If those homeowners were ignored, the rate of delinquent borrowers would drop in half, from 5 percent to 2.5 percent of mortgage holders.
Back before the foreclosure crisis, the nation had a 2 percent delinquency rate.
That means the above-average 5 percent rate isn't being caused by new mortgages. Instead, it's being kept afloat by the same group of delinquent homeowners.
In fact, it's estimated that 80 percent of the country's delinquent mortgage holders fell into delinquency before 2008.
One of the effects of the housing bust has been longer foreclosure processing times, which means a homeowner may miss payments for years before the banks takes their home.
That's a semi-good thing for the real estate market, as it indicates delinquencies are not increasing.
The bad news is that homeowners who are delinquent aren't finding relief.
As foreclosures and short sales continue to be processed, delinquency rates should begin to fall. But unless more homeowners find a solution for their mortgage woes, it could take as long as four years until rates get back to normal, according to the USA Today article.
For many homeowners, bankruptcy could offer a solution.
Often times, struggling homeowners avoid filing for bankruptcy because they want to believe there's another way. But loan modifications and short sales have simply not slowed the flood of foreclosures.
Unfortunately, by the time most borrowers realize bankruptcy is their only hope, they're already years behind on payments, in the process of losing their home, and suffering from decimated credit.
Chapter 13 bankruptcy, also known as reorganization bankruptcy, was created especially for individuals who earn a regular income, but who carry large unsecured debts that make it difficult to pay the mortgage.
When you file for Chapter 13, a legal action called the automatic stay immediately stops foreclosure while you catch up on your payments, which are organized into a manageable schedule.
Never knowing when that foreclosure or eviction notice is going to arrive is no way to live. With bankruptcy, you can get back your financial independence - and your life.
More Blog Entries:
Struggling Homeowners Brace for Expiration of Foreclosure Tax Break: November 7, 2012
Mortgage Delinquencies to Remain High in 2013, by Julie Schmit, USA Today