Number Of Underwater Mortgages Rises As More Homeowners Fall Behind

WASHINGTON — The number of Americans who owe more on their mortgages than their homes are worth rose at the end of last year, preventing many people from selling their homes in an already weak housing market.

About 11.1 million households, or 23.1 percent of all mortgaged homes, were underwater in the October-December quarter, according to report released Tuesday by housing data firm CoreLogic. That's up from 22.5 percent, or 10.8 million households, in the July-September quarter.

The number of underwater mortgages had fallen in the previous three quarters. But that was mostly because more homes had fallen into foreclosure.

Underwater mortgages typically rise when home prices fall. Home prices in December hit their lowest point since the housing bust in 11 of 20 major U.S. metro areas. In a healthy housing market, about 5 percent of homeowners are underwater.

Roughly two-thirds of homeowners in Nevada with a mortgage had negative home equity, the worst in the country. Arizona, Florida, Michigan and California were next, with up to 50 percent of homeowners with mortgages in those states underwater.

Oklahoma had the smallest percentage of underwater homeowners in the October-December quarter, at 5.8 percent. Only nine states recorded percentages less than 10 percent.

In addition to the more than 11 million households that are underwater, another 2.4 million homeowners are nearing that point.

When a mortgage is underwater, the homeowner often can't qualify for mortgage refinancing and has little recourse but to continue making payments in hopes the property eventually regains its value.

The slide in home prices began stabilizing last year. But prices are expected to continue falling in many markets due to still-high levels of foreclosure and unemployment.

That means homes purchased at the height of the real estate boom are unlikely to recover lost value for years.

Underwater mortgages also dampen home sales. Homeowners who might otherwise sell their home refuse to take a loss or can't get the bank to agree to a short sale – when a lender lets a borrower sell their property for less than the amount owed on the mortgage.

Home sales have been weaker in areas where there are a large number of homeowners with negative equity.

Many banks are also requiring homebuyers to put as much as 20 percent of a home's value as down payment and the Obama administration is pushing for a 10 percent down payment requirement on all conventional loans guaranteed by the ailing mortgage giants Fannie Mae and Freddie Mac.

Few homeowners in states hit hard by foreclosures, including Colorado, Georgia and Nevada, have 20 percent or more equity in their homes. Higher down payments make it increasingly difficult for those people to sell their homes.

The total amount of negative equity increased to $751 billion nationwide, up from $744 billion in the previous quarter.

Comments

[joni brit]

11:32 AM on 04/05/2011

excellent point, how can you even tell if assignment was fraudulent? what are some of the things to look for?

[Mary Cochrane]

10:55 AM on 04/07/2011

If the SERVICER turns over (loan in default - late or a modification) documents are filed you never receive copies of and have to get yourself.

During default event, Wells Fargo Bank NA SERVICER will turn over to one of the robo-mill firms in the state the property is located to process the 'Complaint of Foreclosue' in NJ. States vary so you need to find out before its too late what to do. Some states allow the 'b's' to file a public notice you never see.

Robo-Mill Firm is a debt collector/lawyer agency who will file documents to place a lien and declare who the debt is owed with the County Clerks or aka County Recorders. Many are on-line.

Documents in New Jersey are:

Assignment (SERVICER 'Wells Fargo Bank NA' in Agreement with Client (Lehman Brothers-708) will present 'LOAN#' to a TRUSTEE (US Bank National Association) and name 'xxx loan trust xxx'. http://www.secinfo.com (Free Account) can find related info.

Lis Pendens lists (Plaintiff) in Complaint and (Defendants)

Complaint 'of Foreclosue' filed with Court.

In NJ, Assignment should be on record way before the actual Complaint is filed with Court.

SUMMONS - with Docket# will immediately follow Lis Pendens.

YOU MUST ANSWER THE SUMMONS. RUN TO AN ATTORNEY. YOU CAN'T AFFORD TO BE WITHOUT ONE.

Is the Plaintiff the actual party owed the debt?

Don't be like the FL family foreclosed upon twice!

[Mary Cochrane]

01:51 AM on 04/04/2011

Sadly, unemployment hits and if Underwater SERVICER will foreclose. full-speed ahead.
SERVICER will process foreclouse even if you are in an active Short-Sale or Deed-in-Lieu negotiations.

Sadly, one cannot go into bankruptcy to reorganize if unemployed.

Consumers cannot afford to be without a good foreclosure defense attorney.

A foreclosue defense attorney protects you right to due process of law as a defendant who owes a debt. You are safe protected by law from unlawful seizure of property.

In the event, the foreclouse documents reveal the party may not be the lawful party owed the debt, the attorney's services will prove invaluable.

SERVICER who you sent apyments to is in agreement with Trustee during default event.
even missing a partial payment. 60 days notice of intent to foreclouse. SERVICER will process the complaint instructions, the assignment document for signatures with robo-mill law firms and/or processing agencies like DOCX - LPS.

When you are served a SUMMONS do not call the PLAINTFF's attorney asking questions.
You must respond to the SUMMONS and need a foreclouse defense attorney.

Bankruptcy attorney's do not protect your rights of due process using consumer protection laws protecting you from unlawful seizure. The party before the court as Plaintiff must prove they are with Standing (lawful party owed the debt). FL a couple was foreclosed on twice! Trustee may not be lawful party owed debt.

[Scott Martini]

02:46 PM on 03/10/2011

This problem stems from shift of the middle-class perception of home-ownership from one of permanence and security to the view that your home is simply another commodity to trade without intrinsic value beyond what another will pay for it. We traded long-term fixed-rate mortgages that gave us cost-stability for lower-cost mortgages that were subject to market influence and therefore less stable. Often this was done simply to purchase luxury that was otherwise not be affordable and we will now pay a great price for this.

Previous in our history, the middle-class came into being by wresting capital from the hands of the economic elite in the form of high-paying industrial work - all this thanks to organized labor who we now vilify at most every turn. Unfortunately for us we now have almost no domestic industries sufficient to restore the middle class due to increased use of low-cost off-shore labor and steadfast refusal to protect our markets with even a moderate tariffs.

Additionally, I think there is a high social cost to the community when people begin to view the place where they live not in terms of how valuable it is to them but in how valuable it is to others but we can save that for later.

[Mary Cochrane]

03:08 AM on 04/04/2011

The consumer does not get a lower cost mortgage. THE SERVICER brings in secret property to wholesale discounter who sells loans. The consumer gets a retail loan.

If you can hang onto your property even if they change the color of the currency you'll have something tangible. But real estate is a commodity every since 2000 when Congress allowed a superior class of consumer 'financial holding companies' to break the laws.

Your right there is a very high cost to the community.

The value of property was controlled by SERVICERS appraisers. Funny right.

[Buzzmeister]

11:58 AM on 03/10/2011

Greedy mortgage lenders, corrupt credit rating houses, and lousy SEC oversight created this mess. I wish everyone in the country who lives in a home that is underwater (owes more than its worth) would walk away from it and force those holding the mortgages to take the loss. Once foreclosed, the debt is gone and they can buy a new (or even their former home) for much less money. A broker friend has informed me this is becoming a big trend. Some people are so bold as to stay in their home, quit making payments, endure the foreclosure, and, freed of the debt, buy another. You'd think lenders would balk but actually cash is plentiful right now and lenders are more desperate. Bottomline, there is a way out.

[Scott Martini]

02:03 PM on 03/10/2011

"Greedy mortgage lenders, corrupt credit rating houses, and lousy SEC oversight created this mess."

I agree but without a population more than willing to engage in irresponsible borrowing this could not have happened. The sheer number of people who refinanced their homes into adjustable rate mortgages precludes that they were all completely unaware of the risk of tying a long-term high-dollar investment to an economic variable.

[Mary Cochrane]

03:00 AM on 04/04/2011

Deceptive acts by employees of SERVICER who sell RETAIL 'mortgages' & take property into secret pipeline 'Banks' sell discounted loans.
Did you know SERVICERS get 1/4% to 1/2% of balance of mortgages as fee each year.. SERVICERS in agreements with LENDERS. SERVICERS employees the irresponsible parties who would sell their mother for a commission check.
The facts repeat consumers instructed to use equity in their home to keep a roof over their heads.

I agree I was irresponsible to belive I could continue to own a property where inflation, and huge increase over 5 years in municipal, state and federal taxes took up such a chunk of income well exceeding the 'formula' making it impossible to afford the same house and bills as we could five years earlier.

SERVICERS ARE UNDER CONTRACT TO PROVIDE DUE DILLIGENCE AND SUBMIT LOAN APPLICATIONS. Employees claimed they wanted us as a customer for life. Employees advised best use of only asset for themselves to get a commission check. Consumers have nothing to do with an underwriter approving loans.
My decision to refinance did not cause the economy to crash. Read the agreements and you'll realize the loan#'s were used by 'banks' to launder money out of the US to the foreign organization who are their parents.

Master Servicer & Underwriters only put down 1% of the estimated value of a trust, and were paid commissions against an estimated value.

[michelle10]

12:03 AM on 03/16/2011

How can you walk out when your credit gets slammed and you would not even be able to rent a decent place. I put down 20% when I bought my house and the house has lost 70% of its value!

[Buzzmeister]

08:28 AM on 03/16/2011

Talk to a financial advisor. How do people who declare bankruptcy get credit cards and buy houses again. You're credit will take a hit when you walk away, but more damage is done to your credit it you are late with payments. Like many Americans, including my daughter and her family, will have to eat the equity they put into overvalued homes. But, now, with the market glutted with houses, cash, and low interest rates, make the move sooner rather than later. And, BTW, I managed and owned rental property for 10 years. Bad credit on a foreclosure was never a criteria to disallow a renter.

[LMarcT]

08:38 AM on 03/10/2011

Wow... talk about missing the real victims! I really feel bad for those that took seconds beyond the value of their home (i.e. 125% loans), used the money for vacations and luxury items, then complained that their house value had dropped... only to short sell it to the bank. Only the bank loses in that scenario. In my case, and in the cases largely ignored, the responsible homeowners simply lost up to 50% of their life savings they had put into a paid-off home... now THATS the crime here!

[Mary Cochrane]

02:34 AM on 04/04/2011

LMarcT that is not what happened but if it makes you feel better keep repeating over and over and soon you too won't be in Kansas anymore.

[SUZYQUINN]

06:01 AM on 03/10/2011

Not everyone is like former Deutsche Bank Trader, Gregg Lippman, (The Big Short), who successfully bet against the housing industry (credit default swaps),etc. For most American families, foreclosure (some fraudulent), destroyed dreams, homesteads, businesses, family units and worst of all, the confidence and aspirations of children. It is the quintissential opposite of the American dream. Why? Greed? Insurance on a securitized investment? Has the Hathaway man been foreclosed on also? Does President Obama realize, more children and families have become homeless, and jobless, in the last two years, than in any time in history, since the Civil War? Capitalists given Tarp funds supported Banks and Bonuses, and the face of America will become Hamptons summer homes. Perhaps, Mr. Buffet, with all those philanthropic millions, you have made in the last few months, with the help of your 'favorite bank' , consider spreading the wealth to: "Keeping Americans in Their Home and Families Together." Now that's the American Way!

[michelle10]

11:57 PM on 03/15/2011

Dear SuzyQuinn,

Mr. Buffet will give a lot more of his millions to Obama Administration to have him re-elected and keep capitalists and bankers in power. As you mentioned, more people have become homeless and jobless because of the decisions that Obama Adminstration has made. He gave empty promisses before he gets elected and people like me believed his lies and now I am kicking myself badly. He puts someone like Geithner in charge to make more money for people in Wallstreet while people on maintstreet have to bleed day after day. Michelle Obama is campainging about healthy eating while the people on the mainstreet have to worried about finding something to eat at all.

[Mary Cochrane]

02:33 AM on 04/04/2011

Bankers Trust is Deutsche Bank...
Deutsche Bank in Agreements with Countrywide Funding and BOA in 1992....
Mr. Buffett responsible as owner for deceptive acts in which
Wells Fargo & Co/MN using a private brand label sell discounted loans wholesale as SELLER (your loans) and are in agreements with LENDERS and INVESTORS in which as SELLER they get the SERVICING rights. These agreements have nothing to do with the consumer until the default event. During foreclouse what's been happending is the SERVICER is in Agreements that take effect when a consumer misses part of a payment and sends in a TRUSTEE who is at arms length trying to take property and is not the lawful owner of the debt. The SERVICER wants a free house not the consumer. Due process of law is a right of every defendant. If the debt is owed then take the property. But if the lawful owner is taking possession of property in larcenous manner the COURT must prevent an unlawful seizure. The Defendant has evidence that the Plaintiff is not the party in standing. You know what the Plaintiff does not have, evidence they are the party in standing. I've read the documents have you?

[hrpmap]

02:36 AM on 03/10/2011

And next year at this time the headline will be beginning with "Every American"

[michelle10]

12:04 AM on 03/16/2011

Good point.

[sandiegoconservative]

12:28 AM on 03/10/2011

If you can't afford a place, or the risk, then don't buy. It's as simple as that.

If you want your own independence and freedom to do what you please with your home and property, then buy a place and be happy.

[Vaish Words]

10:48 PM on 03/09/2011

I say rent and let the landlord shell out for repairs and renovation!

[galivantstom]

10:20 PM on 03/09/2011

I question that number. I think its way too low based on my observations as a former Realtor. Unless more homes have been repossessed or given back to the banks already, that number just doesn't seem right.

[michelle10]

12:06 AM on 03/16/2011

You are absolutely right. In my neighborhood in Florida 98% of those bought in 2005 & 2006 are underwater, which is 8 out of every 10 homes.

[Belladora]

09:51 PM on 03/09/2011

If you get a chance to watch the new Documentary "INSIDE JOB" you will see how all of this came down. When it started and who was involved and how they walked away with THEIR MONEY INTACT while millions lost everything and many left homeless. There is a lot of SO CALLED good businessmen that should be in JAIL! Once you watch this it will sure make you wonder if we are being SET UP again !!!! This is NOT right and WHY isn't someone doing something RIGHT????

[kamact]

09:44 PM on 03/09/2011

Just walk away,...This is what the banksters would do

[Buzzmeister]

12:00 PM on 03/10/2011

Read my post under Buzzmeister.

[michelle10]

12:08 AM on 03/16/2011

Then, how can you rent a place after you walk away with your credit slammed?

[runfastandwin]

08:02 PM on 03/09/2011

Well I paid 1m for my house and now it's worth maybe 700k. Probably more like 650 or 600. Put that in your pipe and smoke it. I'd do it again too. I'm happy to pay for a nice place to live in than pay a blood sucking landlord for some dump. I don't blame myself, however, it's the idiots over at AIG and Goldman and Citi and Bank screws America and the BUSH BAILOUT (recall it happened in October of 2008 before Obama was even elected). Unfortunately I am powerless against such behemoths, all I can do is vote for people I think might be able to do something other than protect the wealthy.

[Belladora]

09:53 PM on 03/09/2011

It all came down before Obama took office. I don't understand why he doesn't come out of the Oval Office like Teddy Roosevelt. If it was me I would CLEAN HOUSE!!

[galivantstom]

10:33 PM on 03/09/2011

Sadly, Teabaggers and republicans have done their damnest to shift the blame from Bush to Obama. Obama's turnaround policies are working and real job growth is occurring but at such a pace that there has been held to zero or close to it further stimulating the economy.

Unfortunately, Obama and the other democrats haven't really effectively reminded the voting public that the last two depressions we've had occurred under a repubican's watch, Hoover and Bush.

Although my home is under water and I've lost 30% of what I paid for it in 1994, I am still paying my mortgage. It was entered into on good faith by all parties concerned. I Like my home and plan on staying in it for a good number of years to come. So, I continue to honor the contract I entered into. I don't see just being under water as an excuse to walk away or get your mortgage rewritten to reflect current values.

[Shapdiggety]

07:06 PM on 03/09/2011

Add a 6 percent broker fee when you have to sell......now how many are under?

[galivantstom]

11:08 PM on 03/09/2011

Seaking as a former Realtor, let me tell I worked my butt off to represent my listers even to spending up to half or more of my commission just on marketing (newspaper advertising, flyers, Sunday Open Houses). Spending my Saturdays and non open house Sundays showing prospective buyers 10, 15 houses or more which they ultimately did'n't live up to what they wanted after I spent hours going through listings from all over the metropolitan area trying to find the exact house they said they wanted. For all of that, I received only 1,5%. The selling agent also after showing his clients before his clients settled on my listing also received 1.5%. The brokers each received 1.5% part of which goes to pay for the offices and supplies used by the agents, the multi list, insurance (in most states, the broker is liable for the actions of his agents) te selling office generally handles the processing of bids and closing activities.

To be honest with you, I believe 6% is too low. Is it a part of the buying price? Probably in some way it is but rember it is paid by the seller, not the buyer. So, the 6% commission on the house was not a cost incurred by you the buyer, but by the person selling the property.

[haljett]

04:27 PM on 03/09/2011

We are far from this problem going away. It's going to require some serious gut checks and transparency to get through it and solve this issue. Our politicians don't seem up to it.

[galivantstom]

11:34 PM on 03/09/2011

As we look at the present mess, lets keep that Bush gave the banks their bailout monies with no strings attached. Instead of lending and helping jump start they horded their funds an used them to make the greatest profits in their history for some, Goldman Sachs for example. I might add that the bank bailouts were handed out with no strings attached. Bankers responsible for the debacle kep their jobs, witness Panditm and Lewis just to name two. In helping keep America's auto makers alive, money was loaned to GM and Chrysler where everyone shared in the misery. Stckholders at GM lost their equity, bondholders as secured creditors had to take major cuts or not get anything.

All told, Obama did not make the same mistakes by Bush and Company and the industry and America as a whole benefited as did the foreign companies who build their vehicles here like Hyundai, Toyota, Nissan, Mitsubishi, Honda, Mazda and BMW. Had our own auto industry collapsed so would the supplier base resulting in the likely closure of the American facilities and doing their production leaving hundreds of thousands out of work when you inclue the suppliers.

I think Obama showed he is up to it. The republicans, intent on bringing down the administration, bloc voted against every piece of legislation trying to cause gridlock and then blaming it on President Obama and the democraats. The politicians are indeed up to the job but the republicans have shown the aren't.

[haljett]

12:13 PM on 03/10/2011

At this point I don't trust any side of the aisle.