NW Indiana Loan Guy Blog

While it seems like the economy may be recovering, more homeowners than ever are having a difficult time making their payments as mortgage delinquencies reach a record high.

About 5 million households, or nearly one of every ten borrowers, were behind in their mortgage payments by at least 30 days. This report looked at the months of July, August, and September of 2009.

This high number of delinquencies and the number of potential foreclosures associated with it could certainly put a halt to the increase in home prices. In fact, it could potentially cause prices to decrease and impede any economic rebound that we may see in the near future.

According to a post in The New York Times, most of the mortgages with problems are located in California, Florida, Arizona, and Nevada. They go on to say that one in four people in Florida is behind in payments. This may have a lot to do with the housing boom that took place in these states where the home prices rose at an astonishing rate and many people, investors included, were buying in hopes to sell in the short term and make some quick cash.

Now many of those home owners and investors are upside down on their loans, meaning that they owe more, often far more, than the current value of their homes. Many investors, bleeding cash, have just allowed the banks to have the houses and just walked away in an effort to save money.

Fortunately Northwest Indiana has not had the crazy, hyper-appreciation that some of the other states have had, so the housing bust that followed the boom was not as bad. However, we do have a large number of homeowners and investors behind in payments and losing their properties due to unemployment and underemployment.

The investors are also having  to deal with an unfair amount of tax burden that has to be passed along to renters due to the inability to claim the Homestead tax exemption and the higher tax caps for investment properties. What the local governments fail to see is that the victims of foreclosure are going to need to live somewhere for several years until they can purchase again with a mortgage loan (this could be up to four years according to current lending guidelines). Now, because of higher taxes, it could cost them MORE than their old mortgage payment to live in a same size house.

There is possibly a solution in properly done loan modifications. The problem is that the banks are now of the opinion that they can make more money by foreclosing on someone than by modifying the loan. To make matters worse, some lenders are misleading consumers into making poor decisions and some are just refusing to work with the homeowners.

I am convinced that someone who is serious about staying in their home needs to use a well respected, professional loan modification company. From talking with those who have lost their homes, many said it would have been worth the cost and headaches of having someone battle the banks for them and they would have had a much better chance of staying in their homes.

If you are in this situation now and would like more information about how a loan modification could help you save your home, contact me. The best results can be obtained if you do not wait any longer. In fact, contrary to common belief, you DO NOT have to have any late payments to modify your loan, you only have to believe it will be a financial hardship if you do not.

Scott

Scott Swinford, your Northwest Indiana Loan Guy

Your source for Indiana FHA loans, Indiana USDA Rural Development loans, and much more.

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