03/16/2011 03:02 pm ET Updated May 25, 2011

We Haven't Bottomed Yet... The Housing Crisis Continues

The housing market in the U.S. still faces considerable pressure -- even two years into "an economic recovery" (albeit a jobless one). This is best evidenced by the fact that 23.1% of homes in the US with a mortgage had negative equity at the end of 2010, up from 22.5% at the end of the third quarter, according to CoreLogic, a provider of business analytical services.

The current reading is not much improved from the approximate 25% peak at the height of the financial crisis. The lack of employment and real income growth is playing a big role in keeping pressure on prices. Another uncertainty is the amount of "shadow inventory" in the market, either people who are currently holding onto to their homes waiting for the right price to sell, or banks who have foreclosed on properties but have yet to put them on the market.

Startling is the regional/local nature of the crisis, and how much disparity exists among various starts. The three states with the highest percentage of homes under water, Nevada, Arizona and Florida, had 65%, 51% and 47% of homes with mortgages under water, respectively. The three states with the lowest percentage of homes under water, Oklahoma, North Dakota and New York, had 6.2%, 6.9% and 7.2% of homes with mortgages under water, respectively.

Until the housing crisis is dealt with, the U.S. economy cannot fully recover. Hopefully, there may be relief on the way. A weak point of President Obama's 2009 Home Affordable Modification Program (HAMP) is that the legislation did not have any provision to lower the principal owed by mortgage holders. Analysts believe this would be the only way to provide meaningful relief to underwater homeowners. In reality, such a provision could face a serious constitutional challenge. However, there is a chance that homeowners could be getting principal relief from the settlement currently being negotiated by banks and all 50 state attorneys general following the foreclosure servicing debacle last autumn. While nothing has been finalized, a financial settlement worth up to $20 billion is possible. Such a settlement could provide meaningful relief for Americans facing foreclosure.
Hopefully, a deal will be reached soon.

For those interested in refinancing or modifying the terms of their mortgage, it is important to get independent counsel through the process. There are many bad players out there. Many homeowners seeking modifications have been paying upfront fees to scammers and agencies that are preying on their desperation. Most bank employees also have little incentive to help you, there are only a few real specialists in the field of mortgage loan modifications and they are hard to find.

I recommend to homeowners -- even those who think that foreclosure is the only possible outcome -- try web-based solutions for pursuing a modification. There are websites that can help you through the complicated process. One such site for clear solutions, organizing the massive amounts of paperwork and personal financial info and for providing the truth about their chances for obtaining a modification is The website offers a variety of services, and is easy to use, as the application for relief can be completed in 15 minutes.

The site performs over 100 different calculations to help create a personalized report to meet each unique financial situation, factoring in property values, reductions in payments and a lender projected loss report to see if an applicant is a genuine candidate for a mortgage modification. The site is quite honest that way, in that all candidates will be told if a modification is a realistic possibility for them. also offers free chat services with industry experts, and attorney referrals are also available. And best of all, use of the site is 100% free, thanks to third party sponsors and advertisers.

Nearly 8 million homes were foreclosed between 2008 and 2010 and that pace is expected to continue this year. This is a staggering sum for sure, and a heartache not just for those who lost their homes, but for the entire country, as millions of jobs have been lost, the financial system nearly collapsed, and people saw their retirement savings devastated. While politicians and political talking heads love to play the blame game, we need to leave that kind of fighting in the past. The mortgage crisis had many fathers, so looking to assign blame does not solve the problem. There are still another 4 million homes in danger of foreclosure, and I sincerely hope that something can be worked out that is fair to all involved and will keep people in their homes and the number of future foreclosures as low as possible. Failure to do so could put our economic recovery at risk.

In the meantime, if you are in danger of loosing your home to foreclosure, check to see if you are a candidate for modification. Contact an attorney you can trust, or visit a website such as You may not be able to save your house, but you won't know until you try.