Are Home Foreclosures Reaching Peak Range??

The U.S. housing market has witnessed its smallest annual increase in foreclosure activity in four years last month. Foreclosure filings were reported on over 300,000 homes in the month of February, that's approximately 2 percent decline from January but an increase from last year. February represents the 12th consecutive month with more than 300,000 foreclosure filings.

The slight monthly decrease can be linked to the HAMP program. This has worked to slow the pace of troubled mortgages from going into foreclosure, lenders have been attempting to determine if borrowers qualify for government assistance.

Unfortunately there are a number of forces that are working to push foreclosures higher. A major indicator that we all should keep on eye on is the the sluggish labor market which isn't expected to turn around anytime soon. The national unemployment rate now stands at an uncomfortably 9.7 percent and is expected to decrease only slightly by the end of the year. The shaky employment environment increases the likelihood that homeowners will lose the income stream they need to pay the mortgage. It is speculated that many homeowners who have enrolled in the governmaent backed housing rescue plan will eventually fall behind again on their mortgage payments. For those loans that fall out of the HAMP program, we will see a greater number of foreclosures. At the same time, many homeowners with exotic mortgages are expected to face sharply higher payments in the coming months as lower initial rates expire. Many of these mortgage holders may find themselves unable to afford the new payments.

Another major indicator are those homeowners who have negative equity in their properties. It is estimated that close to 25% of homeowners has negative equity. This is scary news for the housing market because borrowers in this predicament are more likely to walk away from these homes and this could start another foreclosure wave.

There is hope and an alternative to all of this. Borrowers need to be informed and guided into the right direction depending on their individual situation. Short sales and the HAFA program, which works hand in hand with HAMP, are alternatives better than foreclosure and that allows borrowers a better chance to have a new beginning and it is a win - win for all parties involved.