New data shows promising trends in California, where the foreclosure rate is down to its lowest in years. According to information from data bureau DataQuick, the rate of foreclosure starts (the first step in the foreclosure process) is down over 50% from previous quarters and over 60% from the previous year. This is very promising news for those suffering from mortgage debt.
Rising Home Prices Lessen Mortgage Debt
According to experts, the rise in home prices is a big piece of the mortgage debt puzzle. As home prices go up, fewer and fewer people are finding themselves saddled with loans worth more than their homes – known as “underwater mortgages.” As the rate of underwater mortgages drops, more and more consumers are able to contribute to the economy, because their homes once again have value. Everything is connected in this way.
Still, many loans continue to go into default. Over 18,000 home loans went into default in the last quarter, so although the overall percentages are plummeting, there are still many people in deep trouble with their home loans. Most of these loans originated in the period between 2005 and 2007, just before the housing bubble burst. Too many homeowners are still unable to refinance, due to the low (or non-existent) value of their homes, and these homeowners remain stuck with high mortgage rates. Programs like HAMP have helped some, and refinancing programs are available, but not everyone can take advantage of these resources. Some homeowners are simply out of options.
Bankruptcy can help stop foreclosure proceedings by issuing an automatic stay. Consult with a foreclosure attorney to determine whether bankruptcy may be the right option in your financial situation.