The North Carolina Bankruptcy Information Blog

The big news recently seems to be rising unemployment, with jobs coming back into focus as yet another election season begins to heat up. But a recent jump in another bad economic bellwether—home foreclosures—is a new cause for concern in these uncertain economic times.

According to a latest reports, the number of mortgage-default notices filed by banks climbed 33 percent between July and August — the biggest single-month increase in four years, according to the data provider RealtyTrac.

As The Huffington Post put it, “Default notices are the first step in the foreclosure process, and the uptick in August may mean that lenders are beginning to clear the logjam that has held up home foreclosures since 2010.…

While many are led to believe that filing for bankruptcy can kill your credit score, it turns out missing a single mortgage payment—a common symptom of recent economic malaise—may be just as deadly to your credit’s near future.

According to a recent article from The New York Times, “Missed mortgage payments, serious loan delinquencies, loan modifications, short sales, foreclosures and bankruptcies all drag down credit scores. Because a mortgage is such a big slice of anyone’s credit profile, it carries more weight than other loans. Both FICO and VantageScore have studied and quantified those impacts. They reached similar conclusions: for people with near-perfect records, a single mortgage payment that’s 30 days late reduces a credit score enough to hurt.…

In 2010, the President Obama reworked his $75 billion foreclosure prevention plan. The second incarnation of the Home Affordable Modification Program (or HAMP) added new incentives to help those hardest hit by the housing crisis, targeting homeowners who were unemployed or underwater in their mortgages (i.e., folks owing more on their loans than their homes were worth).

Unfortunately, shortly after this revamp of a program meant to stymy the real estate reckoning, data revealed that more than twice as many homeowners were kicked out of HAMP as were granted permanent relief. HAMP was further criticized in the beginnings of 2011 following a sharp drop in the amount of loan modifications that were processed through the program at the end of 2010 and the power shift in Washington following November’s elections, ushering in even more Republican scrutiny of the President’s economic policies.…

News just moved from bad to worse for many homeowners seeking shelter under the Obama Administration’s Home Affordability Modification Program (otherwise known as HAMP).

Recent government figures show that the average beneficiary of the administration’s flagship homeowner-assistance program owes their mortgage lender more than $1.50 for every dollar their home is currently worth. As a result, many more homeowners than expected are underwater (owing more than their homes are valued), facing foreclosure and will likely be forced to walk away from their mortgages in the near future.

As The Huffington Post reports,  “A recent study by Federal Reserve economists shows that underwater homeowners are, not surprisingly, much more likely to default on their mortgages.…

Are you struggling to stay current with mounting mortgage costs or finding yourself already in arrears? Well, you’re not alone.  According to a recent Reuters article by Lynn Adler, a staggering one in seven households were behind on mortgage payments or is in foreclosure in the first quarter of 2010.  And while the rate of new foreclosures has slowed, the sheer number of delinquencies and foreclosure actions still occurring, some two years following the beginning of the recession, is a clear sign that the U.S. housing market remains on a rocky foundation.

This first quarter data from the Mortgage Bankers Association also shows that the nation’s foreclosures rate rose to 4.63 percent, up from 4.58 percent in the fourth quarter of 2009—almost a point higher than the foreclosure rate this time last year (3.85 percent).…

In Part I of the Preventing Foreclosure series, you received an introductory look at how to stay in your home, either through bankruptcy proceedings or via negotiations with your mortgage lender. In Part II of this six-part series, we’ll elaborate on the ins and out of working with your mortgage lender, including timelines, terms, and what to say when starting this important dialogue.

Part II – Working With Your Lender

The best time to contact your lender is when you’re current on your mortgage and haven’t missed any payments, but you recognize tough financial times are ahead and that this may change in the near future.  Now, more than ever, lenders are willing to negotiate with home loan borrowers, if only to reduce the number of foreclosures they’re currently dealing with.…