According to the Mortgage Bankers Association, hurricane damages, rising interest rates, gas prices and holiday spending resulted in more Americans become delinquent on their mortgage payments

The percentage of delinquent mortgage loan payers rose to 4.7% in the fourth quarter, the highest level since mid-2003. Most late mortgage payments were in the hurricane zone states of Louisiana and Mississippi.

Homes going into foreclosure reached alarming levels in some Midwest states (Ohio, Indiana and Michigan), states which were once the industrial backbone but have suffered loses of manufacturing jobs.

About one of every five mortgages in Louisiana and Mississippi was delinquent. However, the MBA thinks it only magnifies and increasing problem nation-wide.

The Federal Reserve raised interest rates twice in the last quarter and once so far this year. If the Fed raises rates again, 25% of borrowers with adjustable mortgages may be in for a shock.

Homes lost through foreclosure affect far beyond the homeowner. Foreclosures often lead to abandoned homes, vandalism, increased police visits and a lower tax base.

Ohio had the highest number of loans in foreclosure for the second year in a row. In addition to layoffs at auto and steel factories, residents have fallen victim to predatory lenders. About 16% of mortgages made in Ohio last year were predatory loans, and nearly half the foreclosures involved such loans, said Batdorf, who serves on a state foreclosure task force. A predatory loan typically has unfavorable terms and high fees, which are poorly disclosed or understood.

The number of foreclosures is expected to rise this year. The rates of new foreclosures in Michigan, Indiana, Wisconsin and Georgia are at their highest since 1979.

Falling home prices: Last year home prices were in the double-digit gain. There has been a drop from year to year in a change in fortunes in the housing market. The sales are 12.6% below the sales of a year ago. A decline in sales rose to a record in August 2006. It will take over six months to clear out the backlog of unsold homes, the longest since April 1993.

Price declines are predicted for the rest of the year. The prices from July 2006 to August 2006 fell 2.2% and almost 2.0% since August 2005. Sellers are asking lower prices because of too many unsold homes on the market. Want to buy a home?  Now is the time to shop around with a broard number of homes to choose from and prices are on the decline.

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