On the heals of Bank of America's announcement that they were "getting with the program", or rather instituting a program for mortgage modifications that echoed the plan laid out by the Obama administration, was a report by RealtyTrac, that during the month of March foreclosure activity skyrocketed. This report showed that the first quarter of 2009 saw the highest level of foreclosures on record. Total foreclosure filings reached 803,489 during the first quarter of 2009. This is a jump of 24 increase compared to just last quarter. Of these filings 341,180 of them happened in March. This is a 17 jump from March of 2008. "In the month of March we saw a record level of foreclosure activity - the number of households that received a foreclosure filing was more than 12% higher than the next highest month on record," said James J. Saccacio, chief executive officer of RealtyTrac, in a statement. Foreclosures have hit the economy hard. Housing prices have plummeted and some homeowners are severely underwater - meaning they owe more than their homes are worth. That can remove the incentive to keep up with mortgage payments. A study from the Federal Reserve Bank of Boston reflected that a large portion of missed mortgage payments were a result of unemployment and not higher interest rates. Avoid foreclosure If you find yourself unemployed or behind in your mortgage payments you have options to help you avoid foreclosure. Get a temporary deferment from the bank - This consists of a grace period provided by the bank. The deferred payments will be attached to the end of the loan. This will not change your payment amount, but rather just give you temporary relief from payments. If you are unemployed this may be your best option. Mortgage modifications - These modifications are usually an adjustment to the current interest rate. In any cases what happens is that you take out a mortgage with an adjustable interest rate and after a set period of time this rate elevates, bringing your monthly payments with it. This inflated rate can cause your monthly mortgage payments to increase by several hundred dollars. A new interest rate provided by a mortgage modification will usually be a fixed amount that is less than the current adjustable rate. This may not necessarily be lower than the original amount of the interest of the loan at time of inception but it will be a rate that is lower than your current rate. By lowering your interest rate, your monthly payments are reduced. Extend the terms of the loan - for instance you may go from a 15 year mortgage to a 20 or 30 year loan. While this will lower your monthly payments it will not reduce the overall amount of the loan and in fact will actually increase the amount of interest paid over the life of the loan. Forbearance - This is a temporary discontinuation of payments to allow you a chance to catch your breath. This is similar to a deferment and is really just a stall tactic, not an adjustment. You will eventually have to return to making the same payment levels you were prior to the forbearance. What method will work best for you will depend on your current situation. You will probably benefit from a mortgage modification if you can afford to make lowered payments consistently. While your loan institution will make the decision as to whether to approve a modification, they are not in the business of modifying mortgages and may have very stringent guidelines for mortgage modifications. As a result you may be well advised to consult an agency that performs negotiations with lending institutions for the purpose of a mortgage modification. Together you and the agency can negotiate with the bank to keep you from being forced to face a foreclosure. Although March has come in like a Lion and gone out even worse, this does not mean you need to be a statistic. Get help while you still can.
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