In what many consider an inevitable shift in the foreclosure crisis, prime, fixed-rate mortgages made up the largest portion of new foreclosures, according to a report issued by the Mortgage Bankers Association.

This was the first time for such numbers since the subprime lending boom began.

The Best-Laid Plans

Sources suggest that two major factors are contributing to the upswing in prime foreclosures:

• Rising Unemployment: Though the unemployment rate for those with some type of college degree is 4.4 percent (compared with an 8.9 percent rate overall), this number represents a significant jump from a year ago, when unemployment among the college-educated was just 2 percent. This means that some families who counted on sustained income to keep their houses are now struggling to make payments – or finding they cannot.
• A Glut of Unsold Homes: Because so many houses are currently on the market, selling a house has become a serious challenge, especially for those with bigger mortgages. This means that many of those struggling to pay off debts because of job loss cannot even raise money by selling their houses – the demand for real estate is currently very low.

Time to Buy, Not Sell

As you may already know, it’s a great time to buy a first home.

The sheer quantity of homes on the market means you’ll have a lot to choose from, and the current interest rates favor the purchasers rather than the vendors.

But if you’re looking to sell a larger (rather than a “starter”) home, you may not be so lucky.

Those who may be pushed by tantalizing interest rates to buy a home sooner than they would have otherwise likely won’t be interested in large, elaborate homes – especially in light of the cautionary tales told over and over by those suffering from the current foreclosure crisis.

When Will It All End?

Experts have predicted a variety of timetables for the prime foreclosure crisis.

The least optimistic among these put the crest two years for now, with steady foreclosure action well into 2012.

And Making Home Affordable, the foreclosure-prevention plan introduced by the Obama administration has reportedly only helped about 17,000 homeowners to date – far fewer than the seven to nine million who could benefit from the program, according to its Web site.

If you’re concerned about losing your home to foreclosure, it may be time to speak with one of our sponsoring bankruptcy lawyers about filing bankruptcy.

Chapter 13 bankruptcy designed to stop foreclosure. Talk to a bankruptcy attorney about filing bankruptcy.