Everyone's aware that buying a new house during a recession is hard. But less well known is that during today's difficult times many current homeowners face serious challenges meeting their monthly mortgage payments.
A recent survey by the Mortgage Bankers Association of America indicates that the number of mortgage delinquencies is on the rise. According to the MBA, 5.56 percent of 8.3 million loans on one- to four-unit residential properties surveyed were 30 or more days past due.
However, the number of mortgages going into foreclosure remained steady at the previous quarter's rate of 0.20 percent. Too, another MBA survey indicated that only about half of all loans that get close to the foreclosure point actually are foreclosed upon. The MBA points out that each foreclosure does not represent a family losing its home, as investment properties are counted along with primary residences.
Warren Matthews, a senior economist with the MBA, says that the major cause of delinquency is unemployment. The combination of record high unemployment and a weak economy can turn a family's investment into a financial burden that it cannot always carry.
Major medical expenses and divorce also contribute to the rise in mortgage delinquencies. If a family that has relied on two incomes to foot the mortgage payments splits up, it may become impossible for one to meet the demands of a loan.
The popular options of time sharing and condominiums have run others into trouble. Many have found that they are unable to sell their investment when they want to, that the home hasn't appreciated, and that they are unable to refinance.
Mr. Matthews points out that the rate is not by any means catastrophic, though it is at a postwar high. ''At least 94 percent of people are managing to pay their loans,'' he comments. He adds, too, that the survey may list ''technical delinquencies,'' those who pay a bit late one month but are in no trouble financially.
But, he says, ''the pool is larger now. Over time, more and more people have been able to buy homes, and a larger percentage of homeowners are in a lower income bracket or have jobs that are susceptible to layoff in a recession. So in a squeeze they're worse off, and this is reflected in the figures.''
Regional differences indicate the influence of unemployment on delinquency rates. Major rate increases came from North-Central states, where a 6.04 percent level in the first quarter climbed to 6.47 percent in the second. Other regions changed only slightly, with the South in the best shape.
Some areas are weathering challenging economic times in good form. Susan Gannon, loan-review manager for the Provident Institution for Savings in Boston says that the residential mortgage-delinquency rate for the bank has actually declined over the past year. Massachusetts as a whole has experienced a decline in this area.
At the Provident, conventional mortgage delinquencies dropped from 1.81 percent in August 1981 to 0.54 percent in the same period this year.
Ms. Gannon attributes the decline to active monitoring of loans by the bank. She suggests that in better times ''no one got too excited'' in the banking industry if mortgages went late a couple of months. But now, she says, they tackle the problem early.
''We're very aggressive in terms of being aware of loans in trouble. We want to avoid foreclosures. So we make personal calls, try to get in contact to find out what the problem is.''
''By and large,'' she adds, ''if someone is willing to cooperate and make a good-faith effort, we want to cooperate as well. But the bank needs to be informed.''
Mr. Matthews points out that the Federal Housing Administration has a program specifically for people in this situation. In the case of a threatened foreclosure, a lender will try to renegotiate the loan, help them to find work, or sell the house, something that can be difficult in a slow real estate market.
''If we find borrowers that will put their cards on the table,'' he asserts, ''we're usually able to work something out.''