One In Eight

Can this actually be true?

“More Americans struggled to pay their mortgage bills in the fourth quarter of 2008. A record 5.4 million U.S. homeowners with a mortgage, or nearly 12%, were either behind on payments or in foreclosure at the end of last year, according to an industry survey.

The Mortgage Bankers Association said Thursday the percentage of loans at least a month overdue or in foreclosure was up from 10% in the July-September quarter and up from about 8% a year earlier.

The sharpest increases in loans 90-days past due were in Louisiana, New York, Georgia, Texas and Mississippi, reflecting a spreading recession and massive job losses nationwide.

The report also showed the delinquency rates for fixed-rate mortgages climbed in the fourth quarter, another sign that layoffs are taking a toll on homeowners.

The percentage of loans at least 30 days past due rose to a record 7.88%, up from 6.99% in the third quarter and 5.82% a year earlier — the biggest quarterly jump for delinquencies since the survey began in 1972.”

That means that one in eight mortgage-holders are either behind on payments or in foreclosure. That’s just staggering.

Meanwhile, here’s someone who is doing well by doing good:

“Patricia Greenberg’s townhouse in Irvine, California, was losing about $10,000 a month in value when she received a letter in February 2008 that looked too good to be true: An investor was offering to cut her $472,000 mortgage by 26 percent and her monthly payment by a third.

“I didn’t want to get involved in a scam,” says Greenberg, a cosmetics saleswoman for Orlane Inc., who had bought the house with no money down eight months earlier.

It was no ruse. New York hedge fund manager Ralph DellaCamera Jr. says he’d purchased the mortgage for 60 cents on the dollar and forced the originator, MLSG Home Loans of Reno, Nevada, to eat the loss. Protecting his investment, DellaCamera lowered Greenberg’s debt to keep her in the home. She now pays $2,400 a month instead of $3,800 and plows some of her savings into upgrading the Cape Cod-style residence.”

Greenberg was making her payments on time, but she’s in much better shape now. Any money she spends on home repairs, or on anything else for that matter, stimulates the economy. DellaCamera, who bought her mortgage for 60 cents on the dollar, has lowered the risk of foreclosure for the mortgages he bought, and is still making a lot more than he payed. The company he bought the mortgages from must have thought it was in their interest to sell them, so I assume they profited from the deal. And one more loan has been written down to something approximating the actual value of the home.

What’s not to like? And why can’t this happen more often?