Calls to Mortgage Hotline Double

[Jan 20, 2008.]

 

The crisis in the mortgage industry is taking a toll on telephone lines, if a new report from a non-profit homeownership group is any indication.

The Homeownership Preservation Foundation reports that its HOPE hotline fielded some 143,000 calls in the 4th quarter of the year. That's double the number of the quarter before. It's also 10 times the number recorded in the 1st quarter of 2007.

The non-profit foundation credits the increase to homeowners with adjustable-rate mortgages. The President has urged banks and loan servicers to work with homeowners in an effort to avoid defaults on mortgages. Mortgages numbering in the millions are resetting to higher interest rates. As a result, a number of homeowners are having difficulty making their monthly mortgage payments.

Homeowners are having great trouble selling their homes in today's market. For one thing, lenders have tightened their requirements for home loans, meaning that a number of prospective home buyers are having difficulty obtaining financing. In addition, home prices have been tumbling, meaning that homeowners are having a tough time recouping their investment.

Lenders have also tightened requirements for refinancing, making it more difficult than ever for homeowners to obtain home equity loans. As a result, many homeowners are left in a catch-22 situation.

Of the calls to the housing hotline, 48% were from homeowners with adjustable rate mortgages. The state with the largest percentage of callers was California with 18%, with Ohio and Illinois rounding out the top 3.

The current housing crisis is the worst the country has seen in 16 years. So far, however, the situation has not led to an all-out recession. Officials with the Federal Reserve Board have said they will do everything possible to prevent a recession from occurring. The Fed cut interest rates consistently last year, and more cuts may be on the way in 2008.

Julie Ann Amos
January 20th 2008

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