Mortgage Crisis
By Bob McDonnellIt’s not news that the mortgage foreclosure crisis is drastically impacting homeowners and the broader economy. Nationwide, the number of homes in foreclosure has increased more than 30 percent in the past year.
Fortunately, Virginia is 47th among the states in the percentage of outstanding mortgages currently in foreclosure. Yet Virginia foreclosure filings have increased significantly in recent months. With a high number of Adjustable Rate Mortgages (ARMs) resetting to higher interest rates in October, the problem may get worse before it gets better, and more borrowers may face difficulty keeping pace with increasing mortgage payments.
It is surely upsetting to face the risk of losing a home. But it is a mistake to not communicate with your mortgage lender or servicer if you fear falling behind in your payments. I encourage Virginia homeowners facing difficulty to have a dialogue with their lender or servicer. Given the chance, many lenders will work with borrowers to avoid foreclosure, often by modifying mortgages to make individual payments more affordable.
Homeowners facing possible foreclosure should be wary of unsolicited offers to refinance. Scammers like to prey on desperate individuals, offering refinance terms that seem too good to be true. Some may even suggest that it is necessary to deed your home to a third party to secure such new financing. If you choose to refinance, be sure to obtain independent advice and information and refinance with a reputable lender.
For more tips, check out the U.S. Department of Housing and Urban Development’s Web site, www.hud.gov, which also features a list of local non-profit home finance counseling agencies.