New Hampshire Housing Market, Northeast Not Immune from Mortgage Loan Defaults

As home mortgage loan foreclosures increase nationally, the Northeast has not been as hard hit as other parts of the country.

But the region is far from immune.

At Consumer Credit Counseling Service of NH-VT, a nonprofit credit counseling and education organization, housing-related financial counseling has doubled in the past 12 months.

“We’re seeing a significant increase in families that are unable to keep up with payments on their subprime mortgages,” said Kerry York, executive director of CCCS NH-VT.

After a year or two of low mortgage interest rates on an adjustable rate mortgage (ARM), many are now reeling from higher interest rates as their mortgages reset.

“Recently, we met with a family trying to deal with a rate increase on their ARM. The rate change increased their monthly mortgage payment from $1,300 to $1,750,” York said. “Most people don’t have that kind of wiggle room in their family budget.”

Since July 2006, CCCS NH-VT has completed more than 250 housing counseling sessions. That’s a 31 percent increase over the same period last year. During the last six months, CCCS NH-VT has also worked directly with about 125 families facing imminent threat of foreclosure.

Often, borrowers do not understand the details of the mortgage they are getting.

“Some subprime loans have fairly exotic terms and conditions,” said David Deziel, director of communication at CCCS NH-VT. “Anyone who has ever closed on a mortgage knows how tough it is to review a 10-inch-high stack of documents. During the process, there’s a lot of trust in the mortgage loan officer; sometimes too much.”

Another factor is that people stretch their finances too far to get into a house and could not realistically afford their mortgage to begin with.

According to Deziel: “People need to recognize that there can be a big difference between the amount the lender says you are approved for and the amount that you really can afford. Only you really know what you can handle in your budget.”

York also has a new concern.

“We’re now seeing a scaling back of mortgage products and a tightening of loan approval standards,” she said. “Many people who may have been told that they could [mortgage refinance] if rates went up now might not have that option available to them.”

According to York, if a home owner is worried or falling behind in their payments, don’t wait. Speak with a credit counselor immediately to discuss your situation and your options. York also recommends reviewing your family budget now to prepare for future increases in mortgage payments.

“Too many people wait until it’s too late,” she said. “Deal with the issue head-on before you get a letter from your lender initiating the foreclosure process. CCCS NH-VT will assess your situation, identify your options, and help you make informed decisions about your mortgage.”

SOURCE: The Portsmouth Herald