Financial strains in the mortgage market have sparked a shift toward more secure mortgages in the early part of 2007, but many borrowers remain stuck with sky-rocketing payments, according to Dr. Susan M. Wachter, Professor of Real Estate and Finance at the University of Pennsylvania's Wharton School. Now, with support from Genworth Financial, Dr. Wachter released her second quarter 2007 U.S. Mortgage Payment Index, reminding consumers that safe options exist and offering tips on how to get out of a bad mortgage.

"As we celebrate National Homeownership Month, it's a good sign that many Americans have heard the warning bells and flocked to more secure kinds of home financing," said Wachter. "The good news is that despite problems in the subprime mortgage market, the sky isn't falling. In fact, consumers have more options than ever to get into a good mortgage and out of a bad one."

Dr. Wachter's Index shows that both borrowers and lenders in 2007 have started a trend toward secure mortgages. Lenders have tightened underwriting guidelines and financed more loans for people with credit scores of 650 or higher. In January of this year more than 60 percent of all new mortgages were prime. Moreover, 89 percent of borrowers with one-year adjustable-rate mortgages refinanced into long term secure loans in the first quarter of 2007. Loans with private mortgage insurance have also spiked - more than 55 percent - in March over February.

"While it's not all doom and gloom, there are still a number of people with bad credit stuck in expensive subprime or risky exotic and piggyback mortgages, which could result in dramatically rising payments at best and foreclosure at worst," Wachter said. "That's why we've developed the Mortgage Payment Index to provide borrowers with information to make good home financing decisions."

To get out of a risky mortgage, Wachter proposes a three-step solution.

- First, try to raise your credit score above 620, the traditional cut-off point for prime versus subprime.

- Then, consider refinancing into a fixed rate prime mortgage, which will eliminate rising payments.

- Finally, don't sit still if times get tough.

Lenders, mortgage insurers and non-profits all offer workout programs to make sure that foreclosure is a last resort.

"The bottom line is that the mortgage market is self-correcting - consumers are turning away from exotic loans and towards more secure options," Wachter said. "But for those who remain stuck with rising payments, the time to get out is now."

Published quarterly by Dr. Wachter, and in association with Genworth Financial Inc., the U.S. Mortgage Payment Index evaluates which mortgage products offer borrowers the best value, comparing payments for various mortgage options.

The following mortgages are featured in the new Index for June. The first amount reflects the payment in month one, the second amount reflects the payment in month 61:

- 30-year Fixed with monthly mortgage insurance: $1,400.31 / $1,270.31
- 30-year Fixed with Single Financed Premium mortgage insurance:$1,309.05 / $1,309.05
- Combo: 30-year Fixed and HELOC: $1,328.19 / $1,434.86
- Combo: 30-year Fixed and Closed-End: $1,328.30 / $1,328.30
- Combo: 10/1 Interest-Only ARM and HELOC: $1,203.02 / $1,309.69
- Combo: Pay Option ARM and HELOC: $800.17 / $1,824.49