Wary mortgage lenders, already uneasy from the current rise in consumer debt and uncertain economic fluctuations, are denying many the chance to own their own homes. Without a traditional loan, these borrowers are often turning to the high-risk subprime lending market as their only recourse. But with high interest rates and deeply restrictive terms, subprime loans are only adding to the mortgage market’s problems. More and more people are forced to foreclose.
According to a 2007 Realty Trac study, foreclosure rates have increased from 323,000 filings in the first quarter of 2006 to over 437,000 filings in the first quarter of 2007. Furthermore, 87% of these cases are for single-family homes, townhouses, and condominiums.
Strategies to Avoid Foreclosure
This trend does not have to continue. Nobody wants homeowners to lose their homes, including the lenders. If you are concerned about a possible foreclosure or are going through one right now, there are many resources out there to help you through your situation.
Communication between lender and borrower goes a long way toward avoiding foreclosure. At the first sign of financial trouble, be sure to contact your lender and let them know about your situation. More options become available to you if you work with your mortgage company early on rather than later. For example, you can ask to reduce monthly payments by extending the term of your loan by one year or arrange a temporary suspension or reduction of payments if you qualify for forebearance.
Resources for Homeowners
For further assistance, there are several counseling agencies available that specialize in helping homeowners through difficult times.
ACORN Housing is a national non-profit that offers housing counseling. They have a special program called Home Equity Loss Prevention Program (HELP) specifically created to help homeowners keep their homes.
Housing and Urban Development (HUD)
Part of the U.S. Department of Housing and Urban Development, HUD is a federal organization with a direct mission of helping homeowners in need. Their website has extensive information about the foreclosure process as well as advice on avoiding foreclosure. Also, the website has a searchable directory of housing agencies in your area.
National Foundation for Credit Counseling
The NFCC provides counseling and education throughout the country to help homeowners avoid foreclosure. This organization has a network of nonprofit, community-based agencies with almost 1,000 offices. Consumers in need of immediate assistance can call the toll-free hotline listed above.
Neighborhood Assistance Corporation of America (NACA)
NACA is non-profit organization that aims to help homeowners through their “Home Save Program.”
Created by the U.S. Congress, the non-profit NeighborWorks America has the Center for Foreclosure Solutions program to aid homeowners at risk of defaulting on their mortgage.
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