HOUSING HIT HARD MORTGAGES A MYSTERY CONSUMERS UNSURE OF THEIR RISKS.

Byline: GREGORY J. WILCOX

Staff Writer

A triple whammy of bad news broadsided the nation's housing sector Monday, with reports showing new home sales tumbling, foreclosures spiking and many Americans clueless about the details of their mortgage obligations.

In a poll for the financial Web site Bankrate.com, 34 percent of homeowners didn't know what kind of mortgage they had and 28 percent worry how they will afford their payments.

"That's alarming particularly right now," said Greg McBride, Bankrate's senior financial analyst. "A lot of the trouble in the subprime sector can be traced to homeowners being blindsided by big mortgage payment increases."

The company said that the results reveal the confusion and anxiety that homeowners are experiencing today. For example, "a staggering" 34 percent of homeowners with adjustable rate loans don't know what they will do when it adjusts, the company said.

"Now, the key here is you have to get out in front of this," McBride said of the payment reset wave, especially for holders of subprime loans.

He notes that for holders of adjustable rate mortgages, it is important to review your loan documents and find out when the rate changes, the index the new rate will be tied to and the margin. Adding the margin to the current interest rate of the appropriate index gives homeowners their new interest rate.

McBride says that long-term interest rates are still near historic lows so refinancing might be a wise choice now. For example, Bankrate's site had a 30-year fixed rate loan at 5.68 percent on Monday. An adjustable rate mortgage resetting at this time could rise from about 5 percent to 7.5 percent, depending on the margin and index.

The poll, which also surveyed renters, also found that:

36 percent who now have an adjustable mortgage plan to refinance to a fixed-rate loan.

57 percent have a fixed-rate mortgage.

40 percent of renters consider affordability the biggest obstacle in buying a house.

Just under 12 percent are concerned their credit rating is not high enough to purchase a home.

38 percent would avoid taking out an ARM when they are ready to purchase a home.

Meanwhile, the Web site RealtyTrac.com reported on Monday foreclosure activity jumped an annual 79 percent in California during February.

Last month there were 16,273 foreclosure filings in the state, up 4 percent from January, the Web site said. That's one filing for every 751 households and 1.2 times the national average. California ranked 13th nationally among states with the highest foreclosure rate.

The company tracks homes at each stage of the foreclosure process.

Last month 11,637 homeowners received notices of default, the first step in the process, and 921 lost their home, the company said.

Nationally, there were 130,786 foreclosure filings, up an annual 12 percent and down 4 percent monthly.

Rick Sharga, the company's vice president of marketing, said that California's small month-over-month increase was somewhat surprising.

And only about 10 percent of properties that fall into default here are sold at auction or go back to the lender.

"The state so far has been pretty fortunate that the majority of foreclosure activity has been in the early stages and it appears that most of the properties are being sold well before auction. That bodes well for all parties involved," he said.

greg.wilcox(at)dailynews.com

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SOURCE: Bankrate.com