High unemployment rate
- Re-defaults on loan modifications. Many homeowners who attempted to avoid foreclosure by signing up for a 3 month trial in the HAMP program may end up falling into default again. Presently, the number of defaults in the HAMP program has exceeded 60 percent and many analysts expect that number to rise.
- Upside-down mortgages. One of the biggest causes of foreclosure now is the large number of homeowners who owe more on their home than it is worth. Many of these homeowners decide to "walk away" from their home and allow it to fall into foreclosure because they do not feel that paying the mortgage is worth it and doing so may jeopardize other aspects of their finances.
- High levels of indebtedness. Many homeowners are simply way in over their heads in debt and need to let go. During the boom, many homeowners purchased homes that were well above their means in the belief that things could only improve financially. Unfortunately for many, their finances have not improved and may have even become worse. What they are left with is high credit card debt, shrunken incomes and inflated mortgages that are all pushing them into foreclosure.
. The number job losses experienced in this country is now the number one reason why many homeowners succumb to foreclosure. And unfortunately, the number of job losses being implemented by employers shows no signs of lessening. Also, because the time that the average unemployed American remains unemployed has extended to 8 months and beyond, many unemployed homeowners simply do not have enough savings to pay a mortgage until they find a new job. This combination of high job losses, extended unemployment and low savings is predicted to contribute to the high foreclosure rate.