Study: Millions Of U.S. Families Still Falling Behind On Mortgage Payments

In addition to all the people whose homes have fallen into foreclosure since the bubble burst a few years back, millions more have been having trouble keeping current on their loan payments — and about half of those homeowners say they expect their payment problems to continue.

This is all according to a recent study by the University of Michigan’s Institute for Social Research, which found that between 2009 and 2011, 3.5% of American families (approximately 4.1 million) admitted to having fallen behind on mortgage payments at some point during that time period.

Meanwhile 1.7% of families in 2011 said they are “very or somewhat likely” to fall behind on their mortgage payments in the near future. That would mean as many as 2 million families in the U.S. could be circling the foreclosure drain.

“Our data suggest that the mortgage crisis will continue for the next few years, although a somewhat smaller share of families will experience mortgage distress” says Frank Stafford, co-author of the report. “And even though average savings levels have gone up since 2008, our data show that there has been no improvement in financial liquidity between 2009 and 2011, except among families with more than $50,000 in savings and other liquid assets.”

Additional findings from the study, which can be read in its entirety HERE [PDF]:

*The proportion of families with no savings or other liquid assets rose to 23.4 percent in 2011, from 18.5 percent in 2009.

*About the same percentage of families in 2009 and 2011 had $30,000 or more in credit card and other non-collateralized debts (8.5 percent vs.10 percent) and about the same proportion (48.0 percent vs. 47.4 percent) had no such debt in both years.

“Even if they’re not underwater with their mortgages, [some families] are struggling to save money and reduce their debts,” says Stafford.


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  1. FatLynn says:

    What would actually happen if everyone with a mortgage stopped paying, in some kind of coordinated effort?

    • MrMagoo is usually sarcastic says:

      Why would I stop paying on my mortgage? I signed a contract, I knew what was expected of me, and the mortgage company has lived up to its terms in the contract.

      • FatLynn says:

        For the LULZ.

      • Blueskylaw says:

        I’m sure the mortgage company also had some kind of fiduciary duty to not let their customers buy more house than they could ever possibly afford and yet they let millions of their “customers/victims” do just that.

        Like millions of American households, the Mortgage Bankers Association found itself stuck with real estate whose market value has plunged far below the amount it owed its lenders.

        But the trade group for mortgage lenders is refusing to say exactly how it extracted itself from that predicament.

        On Friday, CoStar Group Inc., a provider of commercial real estate data, announced that it had agreed to buy the MBA’s 10-story headquarters building in Washington, D.C., for $41.3 million. The price is far below the $79 million the trade group says it paid for the glass-walled building in 2007, while it was still under construction. The price also is far below the $75 million financing that the MBA received from a group of banks led by PNC Financial Services Group Inc. to finance the purchase.

        John Courson, chief executive officer of the trade group, declined in an interview Saturday to say whether the MBA would pay off the full loan amount. “We’re not going to discuss the financing,” he said. A spokeswoman for the MBA added that the MBA has reached “an agreement with all relevant parties” regarding the outstanding amount on that loan but declined to provide any details […]

        In an interview late last year, Mr. Courson said he believed mortgage borrowers should keep paying their loans even if that no longer seemed to be in their economic interest. He said paying off a mortgage isn’t only a matter of personal interest. Defaults hurt neighborhoods by lowering property values, Mr. Courson said. “What about the message they will send to their family and their kids and their friends?” he asked.

        Indeed, what about the message?

        Pretty clear to see what went on here. The MBA was taking a bath on its headquarters, so they short sold it and walked away from the financing. It was a rational decision based on their own economic interest. Nobody could blame them from a business standpoint.

        • huadpe says:

          “I’m sure the mortgage company also had some kind of fiduciary duty to not let their customers buy more house than they could ever possibly afford”

          No, they didn’t. At least not a fiduciary duty to the borrower. They had duties to the buyers of the mortgages was all (and there have been lots of lawsuits about breaching those duties).

          “The MBA was taking a bath on its headquarters, so they short sold it and walked away from the financing.”

          From the sound of your summary, it seems they didn’t walk away, but rather engaged in a short sale, which given the situation they were in, was likely the least bad option for all parties involved.

          • FatLynn says:

            Yeah, but there was also a fair amount of illegal lending discrimination that took place. They have a duty to comply with the law, and they did not, in many cases, but there were enough layers of broker/bank/underwriter that nobody will ever be punished for that.

      • crispyduck13 says:

        Yeah I didn’t think FatLynn was being for realz there. Personally I wonder what would happen if people stopped buying houses and built yurts instead.

      • ilovemom says:

        As I understand it the bank agreed to lend the homeowner money to purchase the home, with the home held as collateral via a lien. The homeowner agreed to pay the mortgage or forfeit the collateral (home). I don’t believe the mortgage contract says anywhere that you are required to continue paying. The battery in my sarcasm detector is running a bit low, so forgive me if I misinterpreted your comment.

    • huadpe says:

      Well, most mortgages are insured by the federal government, so the government would be forced to bail out all of the banks, pension funds, and other investors who bought mortgage backed securities issued/insured by Fannie Mae, Freddie Mac, the FHA, and the VA.

      A large number of private mortgage bonds exist as well, and investors in these would lose all of their money.

      The housing market would also crash, since nobody would be able to buy a house with a mortgage, since mortgages would cease to be issued. So everyone who wanted a house would need to pay cash up front for it.

      All in all, probably a recession wiping out something between 10 and 20% of GDP (aka: great depression territory).

    • Lyn Torden says:

      Once we wipe off all of these bad mortgages to the point where there is no more risk of these people defaulting, then we can start to reverse the mortgage/housing economic issue, and the price of homes will go back up. Doing it the old fashioned way of waiting for the home owner to default and then foreclosing is still going to take years more. But if everyone defaults NOW, and gets it over with, and a big boatload of empty houses lands on the market, there will be a big buying surge and a rush to market. It could all be over with in just a few months and we will be out of this crisis, even if the banks will be pretty bruised up by it. But the banks deserve all this for causing this problem in the first place. This is what everyone should have done back in 2008 just before the election.

  2. MrObvious says:

    These people are learning a hard lesson about living beyond their means. Hopefully they will change their behaviors for a brighter future, but I fear any lessons they learn will be short-lived.

    • Coffee says:

      It must be fun to live in a perfect world where everyone who falls behind on mortgage payments does so because they foolishly made a decision to live beyond their means.

      The economy has changed since September 2008. A lot. People who made informed decisions to purchase homes based on their foreseeable future income and moderately safe assumption (which turned out to be wrong) that the value of the property would continue to increase are suddenly finding themselves out of work, or paid less than they were five or ten years ago. The properties they purchased have lost a ton of value, so they cannot be sold to pay off the principal on the loans, and people are trapped.

      But keep on believing in a perfect world.

      • Talmonis says:

        I love the mocking tone from these “people”. “You don’t have $50,000 sitting in the bank at all times. Clearly you’re irresponsible, and deserve to be on the street.” “You don’t live in a rat infested drug ghetto, stupid worker, get back where you belong”. Petit bourgeois swine.

    • RipCanO'Flarp. says:

      Your such a jerk….. Beyond their means!? Job loss, economic downturn, restructuring….general overall economy I’m sure wouldn’t have ANY GODDAMN effect on people trying to stay afloat and stay in their house let alone “learning a short lived lesson”

    • crispyduck13 says:

      Yeah it’s really their fault for “living beyond their means” when both parents get laid off and the family exhausts their savings to keep up on their bills and be responsible. Meanwhile little Billy broke his arm and now they have to scrounge around for $1500 to pay the ER bill, since they lost their insurance months ago and can’t afford it on their own with little or no income.

      They’d totally sell their house and get into something cheaper or even rent, except their house is now worth about 75% of what they still owe on it, and they’ll be stuck with the bill for the remainder if they do manage to sell it. Or they can take the hit to their credit if they short-sell and not be able to get a damn job because hell, even McDonald’s is checking that shit these days. Everyway you look at it, some people are fucked right now, and it’s not because they weren’t living within their means.

      Of course you don’t really care about any of that, you just want to be an asshole on the internet.

      • Nigerian prince looking for business partner says:

        A $1,500 ER bill is a bad example. Even with insurance, my family’s deductible is $10,000.

      • Awesome McAwesomeness says:

        You are the one being an asshole. You are presenting the most extreme situations and making it like this is the norm for all people who lose their homes. We went though a very tough time through no fault of our own(medical issues.) We did the responsible thing and sold our house and moved in with my parents until we could get on our feet. We would have walked away from our house if we had to. We filed bankruptcy to get from under the crushing medical expenses that our insurance didn’t cover. we never once blamed anyone or played the victim. We just behaved as responsibly as possible, did what needed to be done, and moved on. we didn’t cling to our house for dear life. We didn’t put on the woe is me act. We just dealt with it rationally. We got back on our feet and made a plan should this happen again. We also realized that we can’t buy another house until we save a large down payment, buy a house we can pay for on a little more than one salary, and have 1 years salary save in an emergency fund. This should happen in about 10 years, and we are fine with that. We are perfectly happy in our lovely apartment and live within our means.

    • PunditGuy says:

      That’s probably a good percentage of these, but not all of them. The others are learning that nothing in life is guaranteed. If you lose your job and can’t pay your mortgage, then you probably won’t get to keep your house. It’s always been that way. Tossing your life savings at an underwater house isn’t a smart financial decision.

    • sagodjur says:

      Ding ding ding! That’s right boys and girls, MrObvious obviously knows the circumstances surrounding each and every one of the families in this study and he knows for a fact that they are all indeed to blame for their own misfortune.

      The Jones’ of Springfield, Illinois should have known that they would incur expensive medical bills when they were planning on their daughter getting into a debilitating car accident. The Smith’s of Madison, Wisconsin should have known ten years ago when they bought their house that Scott Walker was going to be elected governor and fire 17,000 workers, including the Smith’s wage-earning father…

      That’s right! The Just World Fallacy is alive and well –

      • Coffee says:

        The Just World Hypothesis: keeping me sleeping happily in my bed while all those evil, lazy people in Africa die of starvation since 1996.

      • MrObvious says:

        It’s a shame neither of the families you talk about had heard of something called an emergency fund:

        • crispyduck13 says:

          Yeah, most families have $20k sitting around to settle a massive medical debt. It’s par for the course. And if someone loses their job after that well it’s their fault for not making that rainy day fund twice as big.

          Nice job roping some more dopes into your trolling, you’re quite a pro.

          • MrObvious says:

            Yes, there are a few families with extenuating circumstances that would challenge even the best emergency funds.

            However, I think we all know that the vast majority of people in trouble had been over-extending themselves pretty much their entire lives, and that finally caught up with them. How many people bought homes with zero down payment, zero emergency fund, plus tons of consumer debt to boot?

            And then when I call people out on that I get called a troll and people point out the 1-2% of people with real problems when the vast majority had no financial sense to begin with.

            • sagodjur says:

              “However, I think we all know that the vast majority of people in trouble had been over-extending themselves pretty much their entire lives, and that finally caught up with them.”

              Maybe this is where the problem is. We don’t all know this. Can you provide some sort of proof or citation for this?

              • MrObvious says:
                • sagodjur says:

                  That doesn’t speak at all to what you brought up. You’re generalizing by saying that people don’t save enough or pay close enough attention to their finances, and I’ll agreed that is, by my perception, probably true for more than half of American families. However, I’m asking for proof that “the vast majority of people in trouble had been over-extending themselves pretty much their entire lives.” But don’t bother answering – it’s a trick question. It’s impossible to know each and every family’s situation and therefore it’s impossible to be able to say definitively that most are just financially irresponsible rather than people who just ran into unfortunate circumstances. My point is that it’s pretty dickish and self-righteous to pretend you can judge people you don’t know. I’m sure you would never get yourself into a financially compromised situation. Oh, wait, I can’t say that because I don’t know anything about you. My bad.

                  • Awesome McAwesomeness says:

                    You don’t have to know every person’s situation to make a generalization. That is the point. you are trying to make the exceptions the rule in your fantasy world. The fact is that the averae amount of credit card debt owed by consumers is $15,000. That shows that people are indeed over extending themselves. As a country we have $2.5 billion plus in consumer debt. Debt means that we are buying things we cannot actually afford to pay for. Americans average between 2.5-5% savings. That would be at most $5,000 a year for a family making $100,000 a year. It would take 10 years at that rate for them to save a measly 6 months salary.

                    Our national reputation is keeping up with the Jones. Generally that means that people live beyond their means to keep up with others. That reputation didn’t come from nowhere.

                    • One-Eyed Jack says:

                      Nobody (except maybe Dave Ramsey) makes money off selling responsibility. That’s why people live paycheck-to-paycheck. Nearly everything you look at has a marketing message. Buy my thing/service and your life will be better! We all fall for it, and willingly donate our money to their profiteering causes. It’s not cool to be responsible. It’s more cool to have an iPhone and a house in the “right” neighborhood and the “right” furniture and “right” vacations and a the “right” car and a diploma from the “right” school. Just my observations.

              • Rachacha says:

                While this is anecdotal, when my wife and I were settling on our most recent mortgage our broker was sharing some general “war stories” about how people were still trying to spend more than they could afford even after the market collapse. Wanting to purchase a $500,000 home even though they could only “afford” a $200,000 loan and had to drain all of their accounts to come up with a 5% down payment.

          • Awesome McAwesomeness says:

            Just because they choose not to save doesn’t mean they shouldn’t. Just because irresponsibility is the accepted norm, does not make it right. Saving is the responsible thing to do. People are not victims because they choose to take on a very serious obligation with no long term savings account. Heck, I would bet that most don’t even have $1000 in liquid assets for an emergency fund.

            And, most hospitals are willing to work with you in a medical emergency. If not, there is always bankruptcy. It’s a tough pill to swallow, but often you can keep your house and write off your medical (and all other) debt. In some states, you can reaffirm your house and cars. It’s a legal fix for serious financial problems, and isn’t particularly immoral if caused by things beyond the filer’s control such as a $100,000 medical bill out of nowhere (although if you have health insurance, they should pay for a large portion of that and the rest can usually be paid out to the hospital.)

            • Talmonis says:

              “Choose not to save”.

              Mother of god Republicans are obtuse. Please, for your own sake and the sake of those that for some reason love you, follow the link he provided for the “Just world” fallacy.

      • Matthew PK says:

        The homeowner’s ability to walk away from the secured debt has been written in as their “out” clause from day one.

        You stop paying, you give up the secured asset and you take the credit hit. That’s what you agreed to…. it’s not debt slavery nor is it usury, there is no dishonor if abiding by these contract terms which were included from day one…. The problem arises when either party tries to evade the terms of their contract:

        For example, when a bank attempts to foreclose on a non-defaulted homeowner or when a defaulted homeowner attempts to obstruct the bank from foreclosing.

        You and I both know that the latter example happens TREMENDOUSLY more often than the former. In Nevada, where I live for example, we have effectively made foreclosure illegal.

        So near-zero homes are foreclosing… but do you believe that near-zero people are defaulting?

      • Awesome McAwesomeness says:

        You obviously have no concept of what living beyond your means is if you make such a sarcastic and inflammatory post. If you were living within your means, you would have a great deal of money saved for emergencies. You would also have purchased a home that you could manage to make payments on, with some serious cutting back and dipping into your long term savings, if one person lost their job. Once you go through savings (which you should have months and months saved before you buy a home) one should be able to file bankruptcy or sell the house if need be, even if it is a short sale. At worst, the homeowner can walk away and take the hit. Living within your means means planning for the future. It means having a back-up plan in case of job loss or medical emergency. Living pay check to paycheck with nothing to fall back off is not living within your means. It’s getting by by the skin of your teeth with no room for error.

    • Lyn Torden says:

      These people are learning a hard lesson about how Corporate America operates to trick them into signing up to be perpetually squeezed of everything they have and can get.

      • u1itn0w2day says:

        Oh they got stuff they shouldn’t haven’t been even allowed to look at but the fact that the lack of savings/cash liquidity has increased points out how far above their means many have lived. The gamblers weren’t just the Wall Street speculators they were the borrower that ASSumed they wouldn’t loose their, could get a promotion or overtime or would have no problem picking up a second or third job.

  3. Hi_Hello says:

    that’s a small percentage. Is that number include all American families who are home owners?

  4. AllanG54 says:

    I wonder how many people are blaming the economy as an excuse to be behind on their bills even when they are no worse off than they were four years ago. Of course there are people who legitimately have financial problems but it’s time for their relatives to pitch in and help the same way it was done during the “great depression.” The government is not the be all and end all to everyone’s problems.

    • Nobby says:

      Well Fox news say the government is THE problem, so there.

    • sponica says:

      I hate the “are we better now than we were 4 years ago?” question because it’s a stupid question…4 years ago I was in my 2nd year of my MA program with NO job prospects watching the economy kerplode, so I transferred into an MA program that promised better prospects (unfortunately in 2009, not much had changed)

      I’m not living in the same circumstances that I was back then…the job I have now DID NOT EXIST 4 years ago as the RFP hadn’t been published

  5. Blueskylaw says:

    But, but, but, unemployment is down, consumer sentiment is up, the market
    is on a rebound.These are lies you are telling me, lies I tell you, all DAMN LIES!!!

    • PunditGuy says:

      Read the PDF. The percentage of people who report being behind on their mortgages is down from 2009 to 2011. The percentage of people who report being likely to fall behind on their mortgages is down from 2009 to 2011.

      • Blueskylaw says:

        Even more lies you are trying to telling me, lies I tell you, MORE DAMN LIES!!!


  6. Matthew PK says:

    Who would have thought that re-writing account rules to not mark-to-market real estate assets, increasing subsidized credit and halting foreclosures would have no effect on peoples’ abilities to make their payments?

  7. maxamus2 says:

    What gets me, these people that bought these homes they could never afford, even if they had zero percent interest, just take the total and divide by 360 for a 30 year mortgage, they STILL could not have afforded the home.

    • Lyn Torden says:

      What gets me, these banks, who SHOULD have people that know how to do the math, STILL gave them a loan that they should have known they could not afford.

      • Matthew PK says:

        Banks gave loans because Uncle Sam was buying all loans blindly and stupidly, then insuring them with the taxpayer’s dime.

        Every bank in the world would make as many loans as they could given that circumstance… where the taxpayers were buying them all without regard to their quality. And… surprise! that’s exactly what happened.

        Even still, Uncle Sam is buying mortgages left and right.

        • Bsamm09 says:

          Exactly. These people were doing the math. Risk is an afterthought when you privatize profits and socialize losses. Bailing them out only reinforced this.

        • Jevia says:

          Actually, most of the banks were selling the mortgages to other backs, split up and repackaged as collateralized debt obligations, which, along with mortgage-backed credit default swaps, were sold to various big banks and companies, like AIG (you know, the big insurance company that the tax-payers bailed out), Lehman Brothers (who was allowed to go belly up) and other big banks (Goldman Sachs, et al.) that were also bailed out by the tax-payers. So yeah, ultimately, our government did back those loans.

  8. pythonspam says:

    I wonder how many of these people are falling behind on their loans because their lender told them (or they read a story saying that) nobody would help or pursue a modification if the homeowner was current on their payments.

  9. SilverBlade2k says:

    it astounds me that U.S Home owners didn’t learn from the 2008 crash..

    Oh wait..these are *Americans*….nevermind. I’m not shocked at all.

    • 8bithero says:

      Yeah, because every other country is doing just fine right now…

      Shove your stereotyping xenophobia and popular America bashing, asshat.

  10. u1itn0w2day says:

    Also noted was that families without savings or financial liquidity increased 5%.

    So with little or no financial liquidity is there any other outcome?