Mortgage Default Rates on the Rise

When you fail to make several payments on your mortgage, your loan is considered to be in default. According to S&P Dow Jones/Experian, mortgage defaults are on the rise nationwide. New information shows an alarming trend among mortgage default rates and a consumer’s overall debt. Consumer debt has increased for three consecutive months since December, reaching 1.72 percent.

"The national composite rate was 1.72% in December, eight basis points above the November rate and 26 basis points above September’s post-recession low," said David M. Blitzer, managing director and chairman of the index committee for S&P Dow Jones Indices. "It was primarily driven by the first mortgage rate at 1.68% in December, ten basis points above the previous month's rate and 32 basis points above September's post-recession low."

The trend of mortgage default rates rising has many anxious to avoid falling into a mortgage default. There are a number of things you can do to help avoid a home mortgage default.

When you begin to experience a financial difficulty that may harm your mortgage, act quickly to develop a solution. Don’t wait until it’s too late to begin working on the problem. Put a plan of action into place to avoid mortgage default before you’ve missed your 2nd or 3rd payment.

Let your lender know about the hardship you’re going though by writing a hardship letter. You need to include specifics about the cause of your delinquency, including dates and time frame.

Also, to avoid home mortgage default, work with the lender to find a solution that works for both parties. You may be able to extend the repayment period and track your missed payments onto the back of your loan.

Most importantly of all, don’t just give up and walk away. Foreclosure or a short sale may not be your only options and should only be used as last resorts. Research your options carefully after you’ve suffered a home mortgage default. By taking the time to work out a solution before it’s too late, you’re more likely to keep your home and avoid a tarnish on your credit score.