Although the major causes of mortgage delinquencies are many, there are two major reasons that contribute to this problem.

1. The homeowner may become overextended in the monthly expenses. This is usually due to assuming too much debt when going through the home buying process and not understanding the total costs of owning a home. For example, the homeowner either did not receive pre-purchase counseling or the counseling was insufficient, resulting in the client's buying a more expensive home than he could afford. Also, additional expenses, such as for water, trash and sewage, property taxes and homeowner's insurance may not have been considered.

   Excessive consumer debt may result due to using credit for home improvements, such as drapes, paint, carpeting, landscaping, etc. Second mortgages or equity lines of credit may help make the home purchase dream come true but may overextend the homebuyer's resources.

2. The homeowner experiences a hardship and cannot make the mortgage payment.

   Hardships are usually beyond the borrower's control. There are several situations that can cause a mortgage hardship:

   • Death
   • Illness
   • Loss of Income
   • Excessive Obligations
   • Poor Money Management
   • Unexpected Repairs
   • Divorce/Separation
   • Alcohol or Substance Abuse

   Most hardships can be explained and documented.