Homeowners are missing more mortgage payments

Posted: Thursday, November 06, 2003

AUGUSTA, Ga. The American dream is getting harder for people to hang on to.

More homeowners are missing mortgage payments, risking foreclosure.

The Mortgage Bankers Associ-ation of America reported that the national delinquency rate for the second quarter of 2003 the period from April through June was up to 4.62 percent, a 0.1 percent increase over the first quarter.

The most significant increase came in long-term delinquencies payments owed for 90 days or more.

The numbers indicate that the slow rebound of the economy, and its effect on the unemployment rate, is taking its toll on many borrowers.

"Unemployment has been the key to a lot of the delinquencies," said Laura Armstrong, an association analyst.

Armstrong said unemployment, illness, death and divorce traditionally are the reasons homeowners miss payments.

Missed payments can result in foreclosure, in which the bank or lender reclaims the house and auctions it off, leaving borrowers with shattered credit and no home.

"The American dream is homeownership. Well, the American dream can turn into a nightmare if you can't afford it," said Betty Ashley, who heads the Consumer Credit Counseling Service of Augusta.

Foreclosure is a route many banks generally try to avoid because they rarely are able to recoup their money.

"Look at how the industry works," Armstrong said. "The lenders and investors make money when they're servicing your loan and you're paying it."

Tips to avoiding foreclosure

1. Learn the ins and outs of owning a home before buying. Consider the size of the home and how much space you need, and mortgage rates and maintenance costs involved.

2. Mortgages are long-term investments; be sure you can make not only next month's payment, but also payments five, 10 and 15 years down the road.

3. If you miss a payment, don't ignore letters from the bank that's a guaranteed way to lead to foreclosure. Contact your mortgage broker to work out a solution. The number of payments missed before foreclosure occurs depends on your mortgage company and state guidelines.

4. Remember, missing a credit card payment hurts your credit rating. Missing a mortgage payment can cost you your home.

5. If you're unsure how to handle missing a mortgage payment, seek professional advice.

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