The real estate industry is supposed to be picking up, but more and more home-buyers are still having a problem meeting their mortgage payments. Real estate agent Allison Day says she has seen hundreds of homeowners wanting to stay but not really able to afford it.

Despite the fact that the number of those falling behind heir mortgage payment is increasing, the options available to them are waning. They can go for loan modification, short sale, or foreclosure. Whichever they go for, though, will have its own setback.

Day, who works with Prudential Florida Realty in Oviedo, says lenders are reluctant to modify loans as they lose whenever they have to reduce monthly payment and prolong payment period. This may also account for the Home Affordable Modification Program by the administration not getting the predicted results. Half of those who participated since the March 2009 launch have dropped out; 500,000 have also been rejected for either trial or permanent loan modification.

On the good side, though, local banks are starting to warm up to loan modifications. In the second quarter of the year, Metro Orlando banks have approved 65% more permanent loan modifications vis-a-vis the first quarter. Nationally, though, the number remains bleak.

As for other delinquent borrowers, they opt to up and leave their mortgages and home. It is not born out of the want to deceive their banks but of the thinking that they really have no choice. They would rather lose their homes than keep on paying for a ‘lost cause’.

Those who want to keep a better credit rating opt to go for short sale – and more people are going for this relatively better option. Homeowners would negotiate than their homes be sold for less than the balance of their mortgage. Lender, though, would have to agree to this short sale.

Multiple Listing Service says that in mid-August, of the 829 homes listed on the market in Oviedo and Winter Springs, 30% are short sale and 11% are foreclosures. These distressed properties are pulling down home values: home prices in Metro Orlando have declined for the first time this 2010.

July home prices are 4% lower than July’s and 17% lower than 2009’s. Residential sales are even down by 22%, as first for the year. Another factor that affected prices and purchases is the end of first-time home buyer federal tax credit program.

Some signs, though, are still saying things will be going up. The completed sale of 2,387 homes is 4% higher than that of July 2009 at 2,299 closed sales.