The number of U.S. homeowners who owe more on their mortgages than what their homes are worth has ballooned to 23%, threatening the chances of a near term correction to the housing market.
According to First American CoreLogic, a real-estate information company based in Santa Anna, CA, some 10.7 million homes had negative equity during the 3rd quarter of the year.
Homes that are underwater are a serious threat to a housing recovery because these homeowners are more likely to walk-away from their mortgages. They also affect the liquidity of the housing market as owners are not able to sell their underwater homes. Prices have fallen so far that as much as 5.3 million homes are tied to mortgages that are worth 80% or less of their mortgage principal.
However, most U.S. homes have equity, and 24 million homes have no mortgages at all, according to the same First American report.
About 588,000 borrowers defaulted on mortgages last year, even though they could afford to pay, that’s 2x as much as in 2007.
Related posts:
Sad times we are living in! Anyone in the situation of potentially losing their home should go to http://www.foreclosurerights.org/ for easy to understand, and super helpful information on options.