Preventing Foreclosure: How To Cope With Negative Equity

Mainstreet:

You wouldn't know it from the national media, but just because your home loan is underwater -- meaning you owe more than the house is worth -- that doesn't mean you're headed toward foreclosure. In fact, it may not even be a remote possibility. Here are some interesting facts that indicate "underwater" doesn't usually equal "foreclosure."

First, some background. According to data from First American CoreLogic, about 15.2 million U.S. mortgages, or 32.2% of all mortgaged properties, were in a "negative equity" position in June 2009. More pessimistically, the expected percentage of "underwater" loans may rise to 48% or 25 million homes according to a study released by Deutsche Bank earlier this year.

Read the whole story: Mainstreet

Comments

[desertman]

09:51 PM on 10/18/2009

What a waste. There is no relation between being underwater and foreclosure. Foreclosure happens when you don't make your monthly payments. The writer has no understanding of mortgages.

[dukeitout]

01:48 AM on 10/18/2009

Being underwater and foreclosure have nothing to do with one another. Foreclosure occurs when you either can't or won't make your payments. Being underwater isn't even remotely an indicator of ones ability to make ones payment.

[KIVPossum]

04:00 AM on 10/18/2009

Somehow the media has convinced people the two are related.

Granted the U.S. has 10% unemployment, and maybe another 10% underemployment and these people can't make their payments. Add in the many who fell into the ARM or shyster mortgage traps; those can't make their payments.

But most people are earning what they earned two years ago. They decided then they could afford a certain amount to have a home. Nothing has changed for them except the home is worth less. Big deal, they have a home, the bank didn't promise the home would always increase in value. They're just upset because they overpaid, or bought at the top of the market.

Buying a home is a choice of lifestyle - to have something that is yours, a permanent domicile. Too many people decided a home was a magic money box.

[Archivist1000]

04:41 PM on 10/17/2009

If you can still make the payments, you should stay in your house.

1- you still need a place to live
2- you are still responsible for the debt
3- if you let it go to foreclosure, you will lose any cash (downpayment/payments) you put into it.
4- it will probably hurt your credit rating and prevent you from ever getting a mortgage again.

[Stock market]

12:38 PM on 10/17/2009

Time 2 get 2 work Obama:

10% unemployment
1.4 trillion deficit
people broke, no more credit, no housing
wealth gap wider than ever

hat tip to: http://tiny.cc/financenews

greed returning to wall street
banks aren;t lending
bad earnings from BAC, Citi & GE
foreclosures at record highs

[anticapitalist1983]

12:43 AM on 10/17/2009

the best thing to do is NOT LEAVE! stay in your homes as long as you can, as Rep. Marcy Kaptur said on the floor of the house of reps!

put up a poster in your neighborhood to show your displeasure with the financial crisis: http://www.scribd.com/doc/21140663/wallst
"wall street is at war with america"

it's time to stand up and say enough!

[iplaw]

11:41 PM on 10/16/2009

The real issue is why would you want to stop foreclosure if you are upside down? Especially in states that use Trust Deeds instead of actual mortgages, like California.

[tucsoncindy]

04:06 AM on 10/17/2009

Why keep throwing money into a house that has lost 30 to 50% value? In my opinion the Banks &
Mortgage Co.'s got their Money from the Citizens already. I can't pay my mortgage/prop. taxes
or credit cards bills or out-standing medical bills. If Americans can't find jobs the Financial
Markets will be in deeper debt. Wall Street is still selling packed home loans on the Market.

[desertman]

09:55 PM on 10/18/2009

You pay because it is the roof over your head. You at one time had decided it was worth what you paid for it. What has changed?

If on the other hand you are forced to move you will lose a lot of money through a short sale or ruin your credit rating by declaring bankruptcy.

[dadw5boys]

12:36 PM on 10/17/2009

many subprime lenders did not pay the fees and register the loans as leins on property. many people may own their homes out right and not even know it !!!!!

[dday1235]

09:39 PM on 11/05/2009

do tell how so? i need to know immediately Please

[mlm4420]

10:59 PM on 10/16/2009

Not sure about this study. I believe people with cash flow, but negative equity are more likely to walk away from an underwater mortgage. Makes sense. People should not have to use their resources to save house that has lost its value when they did not create this mess.

[desertman]

10:00 PM on 10/18/2009

One of the downsides of owing any tangible asset is it's value will fluctuate. You imply I should pay for the owner's bad luck in the form of higher taxes to bail him out.

[mlm4420]

09:50 AM on 10/19/2009

No one should bail banks out at all. The banks took a gamble just like everyone else.

[rocketman69]

03:56 AM on 10/19/2009

Better not look at the value of your car, then.

[ZoolRoom]

08:37 PM on 10/16/2009

ALERT

http://www.youtube.com/watch?v=PMe5dOgbu40&feature=player_embedded

[Rosewren]

10:04 PM on 10/16/2009

Congress has to approve and ratify treaties even if the president signs it. You have posted this nonsense over a dozen times. Get lost.

[mamacat]

02:21 PM on 10/16/2009

A family in our town tried to renogiate their mortgage, after they had bought at the top of the housing bubble. They were unable to. So, they moved out for two months, then bought it back for about 40% less than they first bought the house. While this scenario may not at first make sense, because of the problem of ruining their credit by walking away from the first mortgage, they somehow made it work for them. Maybe they got a family member to front for them, I don't know. What I do know is that they are now in the same house they were in before and they bought it for over $300,000 less the second time than they did the first time.

[Stock market]

01:33 PM on 10/16/2009

Unemployment still out of control and unfortunately we do not have anything that even
resembles a jobs plan from our wonderful leaders. Bailouts, tarp, health plans but no jobs.

hat tip to: http://tiny.cc/financenews

If this is change we can believe in, count me out in 2012

[mamacat]

02:29 PM on 10/16/2009

I know that we are in bad trouble, but I have observed here in South Cal that people with the right education and skills are still in demand, while those without those skills and education can't find work.

People willing to do the jobs that no one else wants to do, like plumbers and tile layers, have told me that they have more work than they can handle.

Over the years, talking with the boyfriends of our daughters, I noticed that some of them were quick to complain about not being able to get jobs, but when I suggested that they go to school and learn a trade, they were not interested. It is "the quick buck", or nothing, for some people. Fortuneately our daughters learned to stay away from lazy losers.

[desertman]

10:02 PM on 10/18/2009

Smart daughters.

[JanVanWerth]

11:32 AM on 10/16/2009

I agree--they needed to do a STUDY to find something out that is so blatantly obvious?
And @jojony: It's not about a mortgage being under water, it's about equity being under water--HUGE difference b/c you can sit the latter out, if you are liquid enough. Again, it's not rocket science...

[quiviran]

11:29 AM on 10/16/2009

Foreclosure happens when you don't make payments, not when the asset price fall below the mortgage balance. Problem is the study was done on data from before the era of creative lending and fantasy mortgage product. No jumbo loans, interest only loans, arms, etc, etc, etc. No record high unemployment, still some jobs not sent to China. Probably doesn't mean much today.

[NHGranite]

10:51 PM on 10/16/2009

Can banks still "call" a loan, meaning demand you pay up if you don't have the value of the mortgage covered? They could do that in the last big downturn of the 1990s.

[yakmeat]

11:04 AM on 10/16/2009

Why is this "article" even here? What a joke. There goes 2 minutes of my life I'd have rather spent doing something else. LAME.

[ElBorba]

10:31 AM on 10/16/2009

DON'T WASTE YOUR TIME CLICKING THE ARTICLE LINK

THIS IS NOTHING BUT A HEADLINE

THE ARTICLE IS 2 PAGES OF ABSOLUTELY NOTHING

[robbyJ]

01:20 AM on 10/17/2009

you saved me time, thank you

[desertman]

10:02 PM on 10/18/2009

Agreed. Why was it even posted?

[jojony]

10:17 AM on 10/16/2009

Just walk away from the house.

If your mortgage is going to be underwater over a 5 year timeline, its makes no sense to stay in your house, if you have an alternative.

[desertman]

10:04 PM on 10/18/2009

A mortgage is a binding contract. You should stay in the place make the payments, renegotiate or declare bankruptcy.