Mortgage Delinquencies Spike | Riverside Short Sale Agents | Brian Bean and Tim Hardin | Mortgage Forgiveness Debt Relief

Missed mortgage payments spike in September

The number of homeowners who missed a mortgage payment jumped unexpectedly in September.

The delinquency rate, which measures the number of home loans 30 or more days past due, reached 7.4 percent, according to Lender Processing Services’ “First Look” Report.

That was a 7.72 percent increase from the previous month but a 4.19 percent decrease from a year ago. The delinquency rate had been on the decline in July and August after increases in April, May, and June.

In California, the delinquency rate hit 8.6 percent, a 19.7 percent decrease from September 2011.

Nationwide, there were 5.64 million homes with mortgages at least 30 days past due or in foreclosure, LPS reported. Of those, 3.7 million were late but not yet in foreclosure, and 1.53 million were seriously past due (90-plus days), a 1.16 percent increase from August.

The top-five high-delinquency states were Florida, Mississippi, New Jersey, Nevada, and Louisiana, according to LPS. States with the lowest default rates were Montana, Alaska, South Dakota, Wyoming, and North Dakota, where job markets are robust.

Meanwhile, foreclosure inventory decreased last month to 1.94 million homes, the lowest level in two years, LPS reported. The number of homes taken back by banks fell to 3.87 percent, down 4.05 percent from the previous month and 7.37 percent from a year ago.

The latest figures indicated that banks and servicers were continuing to work through their standing inventories.

Last month, the American Bankers Association reported that home-equity-loan default rates increased to 4.09 percent in the second quarter, from 4 percent the previous quarter. And home-equity lines of credit rose to 1.91 percent during the same period.

Home-improvement-loan delinquencies increased to 0.9 percent from 0.83 percent, the ABA reported.

“While the housing market appears to have turned a corner, we are many quarters away from seeing improvement filter through to reduce home-related delinquencies,” James Chessen, ABA’s chief economist, said in a release.

The recent statistics could be attributed to several factors:

NO “GOLDEN TICKETS”: Homeowners who had been hoping for a loan modification with a reduction of the loan balance are finally realizing the “Golden Ticket” isn’t coming from their bank.

Only a fortunate few actually will receive principal reductions via the $25 billion Dept. of Justice settlement between five major servicers (Bank of America, Wells Fargo, Chase, CitiMortgage and Ally Bank) and 49 states over improper foreclosures.

Those who don’t qualify must resign to a modification with an upside-down home, riding out the market until values again exceed their loan balance, or doing a short sale and starting fresh.

TAX BREAKS EXPRING: Barring last-minute extensions, the federal Mortgage Forgiveness Debt Relief Act of 2007 and California’s Conformity Act of 2010 are set to expire at the end of this year. Both laws exempt some homeowners from paying income taxes after a home goes to foreclosure or short sale.

Banks claim their losses to the Internal Revenue Service as debt cancellation and send consumers IRS 1099 forms, which must be reported on tax returns. A taxpayer could owe as much as $15,000 to $35,000 in taxes on a $100,000 loss to the bank.

With lawmakers focused on the presidential election, it’s anyone’s guess if the tax exemptions will be extended. The federal and state governments are running in the red, and legislators differ on how to balance the budget.

If lawmakers fail to extend the federal law or the state law, which essentially mirrors the federal law but applies to California income taxes, homeowners who miss the deadline face crippling tax bills.

Those betting on government malaise may be hedging their bets to beat the deadline.

HOLIDAYS APPROACHING: With year-end holidays, and the financial demands that they bring, just around the corner, some homeowners who have been living month to month may have reached a breaking point.

Though unemployment figures have declined in the past year, many homeowners continue to be under-employed or kept jobs by accepting reduced hours or pay. Any financial turmoil could upset the balance for those in survival mode.

Whatever the reason, homeowners having difficulty making mortgage payments that exceed 50 percent of their take-home pay face a devastating foreclosure if they don’t find a suitable workout solution.

If the housing market, which has seen price increases in Southern California the past year, has truly reached the bottom, those who wait could again miss the optimum timing for buying another home.

Want to know if you qualify for any of the workout solutions available? Call us today at 951-778-9700 to make an appointment for an interview.

(Brian Bean and Timothy Hardin are Default Advocates and owners of Dream Big Real Estate. They can be reached directly at Brian@DreamBigRealEstate.com or 951-778-9700.)

Brian Bean and Timothy Hardin

Licensed Default Advocates

DRE Lic #01889132

Info@DreamBigRealEstate.com

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Mortgage Delinquencies Spike | Riverside Short Sale Agents | Brian Bean and Tim Hardin | Mortgage Forgiveness Debt Relief

Labels: Mortgage Forgiveness Debt Relief, Riverside Short Sale Agents, Short Sales

# posted by Scott Chappell and Brian Bean @ 6:05 PM