About 12% of homeowners are at least 1 month late on mortgages, report says

Foreclosures are spreading to near-epidemic proportions, expanding beyond a handful of problem states and now affecting almost one in every eight American homeowners.

The economy, driven down by the collapse of the housing bubble, is in turn driving the growth of the housing crisis.

Figures released Thursday show that nearly 12 percent of all Amercians with a mortgage – a record 5.4 million homeowners – were at least one month late or in foreclosue at the end of last year.

That’s up from 10 percent at the end of the third quarter and up from 8 percent at the end of 2007. In addition, the numbers now include many once-qualified borrowers who took out fixed-rate loans.

Data from the Mortgage Bankers Association also showed that nearly half of homeowners – a startling 48 percent – who have subprime adjustable-rate mortgages are behind on their payments or in foreclosure.

The ill-advised lending and borrowing practices that were at the center of the problem are no longer driving up the nation’s delinquency rate. Instead, foreclosures are being fueled by a spike in defaults in places where the economy is deteriorating and unemployment is climbing.

Unemployment for people with college degrees, some colelge education or technical training – those most likely to own homes and have prime fixed-rate loans – has nearly doubled in the past six months, according to the bankers association.

The number of unsold homes in Houston skyrocketed to a 17-month supply in February from an eight-month supply in January because homeowners fear they will soon be in financial straits or already are.

The House passed legislation Thursday to give bankruptcy courts the power to reduce mortgage payments. Previously, bankruptcy judges could only modify loans for cars and student loans, but not for primary residences. Now the judge can cut the interest rate and principle on a home mortgage.

The Senate is expected to take up the measure in a couple of weeks.

The only bright spot in the foreclosure report was that the damage caused by subprime adjustable-rate mortgages is waning.

If you have lost your home and are being hounded by the lender or mortgage insurance company, or are faced with losing your home, please contact our office at (512) 343-2572 or request our free bankruptcy guide.

Ignoring your debts won't make them go away.

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