Mortgage delinquency rate rises as consumers struggle with unemployment

[Aug 23, 2011.]

 

No one plans to become delinquent on mortgage payments. But that's happening more and more across the U.S. as borrowers struggle with lingering unemployment, falling housing values and slow home sales. The delinquency rate for mortgages rose to a seasonally adjusted 8.44 percent from the first to the second quarter, according to the Mortgage Bankers Association (MBA).

The delinquency rate includes mortgage loans that are behind by at least one payment. Mortgages in the process of foreclosure are not included. The serious delinquency rate, which is mortgages that are at least 90 days past due, was 7.85 percent.

Mortgages and unemployment

"Mortgage loans that are one payment behind, or 30 days past due, are very much driven by changes in the labor market, and the increase in these delinquencies clearly reflects the deterioration we saw in the labor market in the second quarter," said Jay Brinkmann, MBA's chief economist. "Weekly first-time claims for unemployment insurance started the quarter at 385,000 but finished the quarter at 432,000. The unemployment rate started the quarter at 8.8 percent but climbed to 9.2 percent by the end of the quarter."

There also were fewer homes in foreclosure during the second quarter. In fact, the foreclosure rate was at the lowest level since the fourth quarter of 2007. However, five states accounted for 52 percent of foreclosures.

It's a tough economy

It can be scary to feel as if your finances are spiraling out of control, especially if you're having trouble making mortgage payments to keep a roof over your head. If you feel worried and helpless about your financial situation, you are not alone. Many American consumers have lost confidence in the economy and are in self-preservation mode. Some folks are putting off purchases, paying down debt and adding money to savings to prepare for the possibility of another recession.

Get help with your mortgage

So what should you do if it's getting tougher to make monthly mortgage payments? First, don't panic. Contact your mortgage loan servicer to discuss the situation and find out what kind of help may be available to you. If you have home equity, good credit and a steady income, use a mortgage loan calculator to determine if refinancing might help. Doing a refinance could allow you to lower interest and monthly payments, or even change the length of your mortgage.

 

About 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.