After the financial crisis, many people found themselves struggling to make their mortgage payments, especially if they had other commitments such as credit card debt and auto loans. This led many people to lose their homes to foreclosure.
However, the mortgage situation has been improving, as TransUnion reported the national mortgage loan delinquency rate decreased nearly 14 percent in 2012.
“The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels,” said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit.
Martin added that the elevated delinquency levels that the country is still experiencing can be attributed to borrowers who haven’t been making their payments for a long time.
There is still a long way to go before the national delinquency rate returns to pre-recession levels, but this is a vast improvement compared to the peak of the financial downturn. According to TransUnion, mortgage delinquencies increased 54 percent in 2007, 53 percent in 2008 and 50 percent in 2009.
Moving forward, TransUnion projects the delinquency rate to continue its downward trend but remain above 5 percent.
Even with the steep decline in 2012, many people are still struggling to make their mortgage payments each month. Those people have a number of options available to them.
Mortgage refinance – One of the most popular ways to make a mortgage more affordable has been refinancing, as mortgage rates have been around record lows for quite some times. People can either apply for a loan through a traditional lender or the government. Those who are unable to get a new loan from their lender should look into the Home Affordable Refinance Program.
This government-sponsored program enabled many struggling borrowers to be able to get more affordable loans. To be eligible, the loan must be owned or guaranteed by Fannie Mae or Freddie Mac with a loan-to-value ratio greater than 80 percent. People must also be current on their payments and have a good payment history for the pas year.
Loan modification – Another option is to apply for a loan modification. This can also be done though a private lender or the government. For example, the Home Affordable Modification Program allows struggling borrowers to receive a modification. These can lower your balance and shorten your term, among other things.