Archive for the ‘underwater mortgage’ Category

Underwater Mortgages in the U.S. by City

Sunday, June 6th, 2010

For most of us, the story of how the Great Recession started is a familiar tune: the stock market soared because of speculation on the real estate market, which meant real estate prices soared as well. And when the bubble burst, millions of Americans lost serious money and foreclosure rates climbed steadily.

And the latest news, according to real estate information source Zillow.com, still reflects a seriously distressed housing market in many parts of the country.

Underwater Homes

One of the biggest problems homeowners face today is negative equity: when you owe more on a home loan than the property is currently worth, you’re said to have negative equity, or be “underwater” on your mortgage loan.

According to sources, a whopping 23.3 percent of U.S. homes are currently underwater, slightly more than the 23 percent reported in the last quarter of 2009. Here’s a look at the U.S. cities currently suffering from the highest negative home equity rates:

  • #15: Jacksonville, Florida. Here, 127,807 homes, or 49.1 percent of residences, are currently underwater.
  • #14: Riverside, California. This city has a 51.2 percent underwater rate, with 347,778 individual homes.
  • #13: Tampa, Florida. 286,303 underwater homes give this city a 53.1 percent rate.
  • #12: Vallejo, California. With 41,436 homes underwater, this city has a 54.7 percent rate.
  • #11: El Centro, California. A 54.9 percent rate means 12,103 houses in this city are underwater.
  • #10: Port St. Lucie, Florida. With 54,190 homes underwater, this city has a 56.2 percent rate.
  • #9: Stockton, California. Once the foreclosure capital of the country, this city now has the dubious distinction of a 57.7 percent underwater rate, with 64,614 homes underwater.
  • #8: Fort Meyers, Florida. Here, 58.2 percent of homes (83,533) have negative equity.
  • #7: Lakeland, Florida. With 62,423 homes underwater, this city has a 58.5 percent rate.
  • #6: Merced, California. 24,076 underwater homes, for a rate of 58.8 percent.
  • #5: Modesto, California. A 60.7 percent rate with 54,417 homes underwater.
  • #4: Reno, Nevada. 45,107 homes underwater gives Reno a 64.4 percent rate.
  • #3: Phoenix, Arizona. Here, 64.4 percent of homes (totaling 479,692) have negative equity.
  • #2: Orlando, Florida. With 289,209 homes underwater, Orlando has a 74.8 percent rate.
  • #1: Las Vegas, Nevada. A whopping 80.6 percent of homes (254,880) have negative equity.

Negative equity is no small matter for affected homeowners, considering that mortgage modifications have been difficult to process and foreclosure is generally a trying process.

For some people facing foreclosure of their homes, a Chapter 13 bankruptcy filing may help, but it may not help the problem of owing more on a house than it's worth.

If you have negative equity in your home, consider speaking with a personal bankruptcy lawyer about your options.

Additional Resources

Estimates of Negative Equity among Nonprime Borrowers (PDF)

Foreclosure Mitigation Efforts in the United States (PDF)

Posted in Chapter 13 Bankruptcy, Foreclosure, Mortgage Foreclosure, underwater mortgage | Comments Off

New Mortgage Help Announced

Monday, April 5th, 2010

Americans struggling against underwater mortgages and those who have lost their jobs may have new government-sponsored ways to stay in their homes and keep up with mortgage payments. Here’s an outline of two new programs, and what they may mean for you:

Help With Underwater Mortgages

If you owe more on a mortgage than the home’s current market value, you’re “underwater.” It can be a scary place, but there may be a way out.

  • If you’re current on payments: Assuming you haven’t missed any mortgage payments, you may qualify for a mortgage loan backed by the Federal Housing Administration (FHA) which may help you reduce your monthly payments and the amount you owe. In order to do this, you need to meet regular guidelines for FHA loans, and you need to owe more than 115 percent of your home’s current market value. If you qualify, your debt can be written down so that you owe no more than 115 percent of the home’s worth and your payments do not exceed 31 percent of your income.
  • If you’re behind on payments: Borrowers who are 60 days or more late on their mortgages may benefit from a new provision of the Home Affordable Modification Program that allows lenders to reduce a loan’s principal. So, if your lender is participating in HAMP, your loan may qualify to be decreased and/or have its interest rate lowered.

Mortgage Help for the Unemployed

If you’ve lost your job recently and are beginning to worry about making payments on your house, you may qualify to have your payments temporarily lowered or eliminated. Here’s how:

  • If you receive unemployment: In order to get this benefit, you must be receiving unemployment pay from the government and be able to prove that you are.
  • And if you meet the criteria for HAMP loans: In order to take advantage of this program, you must live in the house as a primary residence, owe mortgage payments that exceed 31 percent of your paycheck, owe less than $729,750 on your mortgage, and demonstrate financial hardship, such as being job loss.
  • You get a temporary reduction: If you qualify, you will have a three-month period in which you are only required to pay 31 percent of your income toward your mortgage. After that period, you can initiate a review to extend the program for another three months.

The benefit for homeowners is clear, but lenders may benefit from the program as well. It seems that borrowers who owe more than 115 percent of their home’s value are the ones most likely to walk away from their mortgages or file bankruptcy, leaving the banks with nothing.

Posted in Job Loss, Mortgage Foreclosure, underwater mortgage | Comments Off