Foreclosures hit hard in first quarter of 2009 - By: Billy Alverado

2009 promises to be a record year in home foreclosures. The first quarter of 2009 has already seen 803,489 foreclosures. This is a 24 of these foreclosures occurred in 5 states.

The worst hit states

1. California - The "Gold Rush" state had 230,915 filings in the first quarter of 2009. This is nearly 29 increase from last quarter. 107,785 of these foreclosures occurred in the month of March 2009 alone. A major influence on this number is the fact that California also has the highest level of unemployment, 10.5 from last quarter. However the state still has 119,200 foreclosures for the first quarter of 2009.

3. Arizona - One in every 54 household in Arizona is and has been in foreclosure in the first quarter of 2009. This is an incredible increase of 80.

5. Illinois - Although this state is only 5th on our list it saw an increase of 44% over last year.

While these figures are staggering and the current unemployment rate is sure to have an extended effect on further foreclosures, there are still ways to 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 the rate of foreclosures has never been higher you do not need to be a statistic.

About the Author

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