How Far Behind Before Foreclosure?

Foreclosures are at an all-time high. People who own homes are having trouble dealing with the great increase in their adjustable mortgage payments and are now receiving more foreclosure notices than ever. It's a crisis in the subprime mortgage market. How far do you have to be behind before you get a foreclosure notice is up to the mortgage lender. But normally it is three months or 90 days past due.

The place where foreclosures are hitting most is in the Midwest, and two states that recently had big housing booms: California and Florida. Each day it is projected to get worse as more loans get further behind in payments. Two million adjustable rate mortgages are scheduled to increase their interest rate much higher any day now.

Subprime mortgages; these are the ones to people who really couldn't put the 10 to 20 percent down and instead were offered next to nothing down, and just interest payments or a little more for the first two to five years - these mortgages were hit right away when the credit crunch began. But now the Mortgage Bankers Association says that now some people with normal mortgages are having problems coming up with payments - and are in trouble.

The subprime defaults have spilled over into the global financial markets. Stock prices are all over the map because of uncertainty. Remember that most of the big banks and securities companies have a good share of the subprime loans wrapped into their offerings. Wall Street watches for the other shoe to drop.

Bush foreclosure statement; Bush's mortage housing proposal, was an attempt to calm the market - announcing changes in the FHA, or Federal Home Administration insured loan program. Democrats had been demanding that something be done to help - to ease the market.

But even now, Democrats are saying the Bush Foreclosure relief statement wasn't enough. They say that Bush should put an end to the predatory lending from mortgage lenders who were only interested in making a buck for themselves and not caring whether the borrowers could afford the loan.

And the deadly combination now is the high mortgage payments, low home prices now, and a weak job market - lenders are now more cautious - so trying to qualify for something lower just doesn't work for people with subprime mortgages.

The wave of foreclosures will not peak until next year. Mark Zandi of Moody's Economy says that the resets on subprime mortgages will add another $250 to $300 on current payments.