Many homeowners these days are finding themselves in financial trouble which is preventing them from paying their mortgage payments each month. In fact, there are hundreds of thousands of homeowners in that situation. For many of them, a loan modification plan has been the answer. But for many others, there is more that needs to be done.

Roz Dalebout in Salt Lake City is one of those homeowners. In the last several years, she has encountered many financial problems. Last June, she contacted her mortgage lender to notify them that she would be having problems making her monthly payments. She was given a loan modification in which the company lowers the interest rate, defers some of the amount owed, extends the life of the loan or does something similar so the homeowner’s monthly payments are lowered. However, she is still waiting to hear if she qualifies for a loan modification and it’s been nine months since she first applied!

Housing advocates are concerned that stories like this one are all too common and unfortunately, thousands of these people lose their homes even after modifying their loans. Also, selling their home is not an option because of the economy’s problems. These homeowners will not get enough out of their home to pay it off and they are still stuck with a sizable portion of the mortgage with no place to live.

One of the problems with the mortgage system is that the company that the homeowner makes mortgage payments to is only servicing the loan. Investors actually own the mortgages in a complicated web of pension funds, hedge funds and other types of investments which make the mortgage industry so complicated. The investors in turn must decide if offering a loan modification is a good idea or if it will result in more losses or an increase in foreclosures. The number of applications for loan modifications only serves to slow down the entire process.

As part of the solution, some banks are taking the loan modification process into their own hands. Some are selling the loans on the secondary market. Zions Bank in Utah and Idaho is one of the banks that have broken away from the Obama administration’s plan to offer lower mortgage rates and other modifications to help struggling homeowners stay afloat.

If you need help with your mortgage burden, Ryan Carver with the AAA Fair Credit Foundation in Salt Lake City has two suggestions: Be sure to stay in contact with your lender so they know what is going on with your budget and also look for help from reliable sources, such as HUD or other organizations designed to help struggling homeowners. The quicker you alert the mortgage lenders about your situation and do something about it, the more options you will have.

I've been wondering what happens when someone decides they don't want to pay their mortgage but stays in their house. Do they get to live mortgage- free during this period? It turns out the answer is yes. The term for this is squatter's income and it's pumping billions of dollars into the economy. As the chart below shows, a homeowner can extract tens of thousands of dollars from their home and then not pay their mortgage for up to 800 days. That's almost three years of free living. And if a homeowner gets a mortgage modification at the end of the 800 days, the entire process can be reset.

According to a report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision over 50% of mortgage modifications defaulted after nine months. So that's an awful lot of free living. And considering the fact that many of these banks are taxpayer supported, that's an awul lot of living on the public dole.

JP Morgan Chase estimates $1.1 trillion of defaulted mortgages are generating billions in squatter's income. Homeowners that don't have to pay a mortgage have a lot more disposable income. It's another example of how irresponsible homeowners have been able to bilk the rest of the country.

Former Fed Chairman Alan Greenspan said today on Bloomberg TV that the recent rise in Treasury yields may be a signal that interest rates are heading higher.

The yield on 10-year Treasury notes was 3.86 percent at 12:19 p.m. in New York, up from 3.69 percent at the end of last week.

Some quotes from the interview:

“I’m very much concerned about the fiscal situation,” said Greenspan, 84, who headed the central bank from 1987 to 2006. An increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.”

In the past there was "a large buffer between the level of our federal debt and our capacity to borrow,” he said. “That’s narrowing. And I’m finding it very difficult to look into the future and not worry about that.”

Greenspan said last year that a consumption tax like the European VAT may be the way to narrow the deficit. Today he expressed concern about that approach: “I’m not convinced by any means that we can succeed in stabilizing this long-term outlook strictly from a value-added tax."

So there you have it. Pearls of wisdom from the former Fed chief. I wonder how Bernanke will respond. Greenspan is sure working hard to rehabilitate his image.

Average the 30-year fixed rate mortgage rates moved up 3 basis points last week from 4.96% to 4.99% according to the Freddie Mac Primary Mortgage Survey. The BestCashCow mortgage averages actually declined slightly falling from 4.96% to 4.95%. Either way, both averages show mortgage rates under 5%.

Averages though won't get you a mortgage and I like to check and see what rate is actually available. Since I live in Massachusetts I checked Massachusetts mortgage rates. Below I compared the best rate I could find on a $200,000 30-year fixed rate mortgage with 0 points:

This Week Last Week

Rate: 4.875% 4.750%

Points: 0 0

Fees: $1,995 $1,995

For the first time in seven weeks, the top rate rose, moving from 4.750% to 4.875%. We'll see if this trend continues.

Despite the discussion of the Fed ending its program to keep mortgage rates low, rates have moved very little over the past few weeks. Will they move up in the future? I explore this a bit in an article entitled Will Mortgage Rates Rise When the Fed MBS Program Ends? The bottom line seems to be yes, but not as much as people once feared.

Related Mortgage Video - Key Things to Know About Getting a Mortgage

Other mortgage averages also showed movement. While the 15-year FRM only moved up one basis point from 4.33% to 4.34%, the 5-year ARM rose 5 basis points from 4.09% to 4.14%. The much more volatile 1-year Treasury-indexed ARM rose from 4.12% to 4.20%.

Here's what Freddie Mac had to say about the rate situation:

“Mortgage rates inched up slightly this week as bond yields rose even further,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Interest rates on 30-year fixed mortgages, however, were still below 5 percent for the fourth consecutive week.

“Household debt burdens on aggregate continue to improve through the end of 2009. The Federal Reserve reported that the financial obligations for homeowners declined to under 16.1 percent of their disposable income in the fourth quarter, which represents the lowest share since the third quarter of 2003. Similarly, the obligations share for renters fell below 24.4 percent, the lowest since the end of 1993.”

Mortgage rates continue to move in a tight range. As the chart shows, they've gone mostly sidways since September of 2009. Many analysts are predicting rates will rise, but we have yet to see any indication of that.

Use the BestCashCow rate tables to find the best mortgage rates in your area.

Austin is the top spending city in the US, with its residents shelling out $67,076 in household spending. That's according to a report issued by Bundle, a site that tracks the spending and savings patterns of users. The data excluded money spent on mortgages and rent which helps explain why some expected cities aren't appearing higher in the list. Cities with lower mortgage or rent payments free up more cash for spending on electronics, furniture, eating out, travel, and more.

More diverse cities like New York and Los Angeles also have lower averages because of extremes in spending. If Manhattan were broken off from the rest of New York for example, if would be #3 on the list.

The top 20 list includes:

1. Austin ($67,076)

2. Scottsdale, Ariz. ($64,687)

3. San Jose, Calif. ($59,022)

4. Arlington, Va. ($52,085)

5. Plano, Texas ($56,738)

6. Raleigh, N.C. ($53,398)

7. Nashville ($52,964)

8. Tucson ($51,857)

9. Irvine, Calif. ($51,286)

10. Durham, N.C. ($51,114)

11. Washington, D.C. ($49,431)

12. Dallas ($47,920)

13. Seattle ($47,336)

14. Reno ($47,273)

15. Corpus Christi, Texas ($46,311)

16. San Antonio ($46,122)

17. Honolulu ($46,087)

18. Oklahoma City ($45,449)

19. San Francisco ($45,291)

20. Madison, Wis. ($45,275)

The lowest spending cities are:

1. Detroit ($16,446)

2. Hialeah, Fla. ($19,397)

3. Chula Vista, Calif. ($21,424)

4. Toledo ($26,962)

5. Boise ($28,006)

Obviously, low house values aren't enough to help spending on some areas.

A new plan by the federal government plans to put rules and regulations in place to help prevent massive bonuses for officials in companies like Freddie Mac and Fannie Mae as well as create stronger protections for consumers who sign up for mortgages. According to Timothy Geithner, the system for financing homes “cannot continue to operate as it has in the past.”

The recent announcement comes as Congress is beginning to put more pressure on the Obama administration to fix the problem in the mortgage market. The Treasury Department and the Department of Housing and Urban Development are planning to publish a list on April 15 including questions concerning the government’s role in housing finance issues. The list will also ask about the designs of mortgage products as well as financial protections for the consumers who sign up for those products.

Fannie Mae and Freddie Mac have already received more than $125 billion from the federal government to help bail them out of the mess they found themselves in. Republicans have criticized the administration for not having a plan and that criticism continues. But Geithner told the House Financial Services Committee earlier this week that the administration was going to “take a fresh, cold, hard look at the core problems” within the mortgage financing industry so they can come up with a set of reforms and regulations to correct the problems that have been caused. However, many are still complaining about this plan because they did not set up a timeline in which to devise a plan. Spencer T. Bachus, the representative from Alabama, told the Secretary of Treasury that reform is vital in order to stop the bailouts and to help the American economy bounce back from the problems it is having today.

In response, Geithner said the administration would come out with a plan once the American economy began to stabilize. Currently, the Federal Reserve is planning to enact a $1.25 trillion program next week which will purchase mortgage-backed securities. And if the mortgage rates rise quickly after that happens, the Fed may need to take more action. However, when asked if the government should have a role in guaranteeing mortgages, Geithner said that was the main question that was before him. He went on to say that there are several models worldwide in which nations support the housing finance industry and it works for them. In some countries, the governments even underwrite mortgage insurance, but they do not have the number of mortgages that the United States has.

What do you think the administration is going to do about this situation? Do you have any ideas of how to fix it or do you trust our government to work it out in due time? Let us know your thoughts about the situation.