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Report: 1 in 5 U.S. homeowners underwater
ms DNC ^ | 2/10/2010 | Reuters

Posted on 02/10/2010 8:40:56 PM PST by Nachum

NEW YORK - One of every five U.S. homeowners owed more on their mortgage than their home was worth in the fourth quarter, a trend that poses a serious threat to the U.S. housing market's recovery, real estate Web site Zillow.com said on Wednesday.

Homeowners with "underwater'' mortgages are more prone to defaults and foreclosures. They typically do not qualify for refinancings and are unable to sell their homes because they would need to cough up cash at closing time to pay off their mortgage.

(Excerpt) Read more at msnbc.msn.com ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: homeowners; mortgage; realestate; report; underwater

1 posted on 02/10/2010 8:40:56 PM PST by Nachum
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To: Nachum

That doesn’t mean they’re in their pool.


2 posted on 02/10/2010 8:43:23 PM PST by HiTech RedNeck (I am in America but not of America (per bible: am in the world but not of it))
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To: Nachum

there is still hope, four out of five ARE NOT. It will not get better til we get rid of these corrupt government selected officials.


3 posted on 02/10/2010 8:43:35 PM PST by television is just wrong
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To: Nachum
Lousy "4% Unemployment" Bush's Fault.


Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

4 posted on 02/10/2010 8:45:51 PM PST by The Comedian (Evil can only succeed if good men don't point at it and laugh.)
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To: Nachum

It only matters if you have to sell.


5 posted on 02/10/2010 8:45:52 PM PST by IYAS9YAS (The townhalls were going great until the oPods showed up.)
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To: Nachum

They must be wealthy enough to afford SCUBA systems for 24x7x365.


6 posted on 02/10/2010 8:46:05 PM PST by James C. Bennett
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To: Nachum

Bush’s fault.


7 posted on 02/10/2010 8:48:25 PM PST by Oldeconomybuyer (The problem with socialism is that you eventually run out of other people's money.)
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To: Nachum

In Florida it seems like it could be more than 1 out of 5. I know lots of young couples underwater on their mortgages, just because they happened to buy in the 2005-2006 period when prices were skyrocketing. Even if you bought with 20 percent down, after watching house values plunge around 40 percent...you’re underwater. None of those I know are in financial problems, however. they are still able to afford their mortgage. But it feels to them like they’re shoveling money in a hole because they don’t believe they’ll be “above water” anytime soon.


8 posted on 02/10/2010 8:50:09 PM PST by dawn53
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To: IYAS9YAS
It only matters if you have to sell.

But slowly, over time many of these folks will need to sell. Death, bankruptcy, divorce..all will cause a forced sale. These forced sales will continue to keep prices down..for a long time.

9 posted on 02/10/2010 8:51:24 PM PST by ExtremeUnction
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To: Oldeconomybuyer

Global Warming!


10 posted on 02/10/2010 8:52:01 PM PST by kaboom
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To: Nachum

I am underwater as many Arizonans are. Thankfully not in financial trouble but there’s always the nuclear option. Hopefully I will never have to use it.


11 posted on 02/10/2010 8:52:39 PM PST by libh8er
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To: IYAS9YAS
It only matters if you have to sell.

This is true, but many homeowners are discouraged by negative equity because it's basically like paying rent. If the value of the home has gone down considerably and there is no hope of positive equity for an extended period, many homeowners would rather give up and let the bank foreclose than have to pay up to twice as much in payments if they stayed than they would have to in rent if they chose instead to walk away. Compound this with a job loss, having more disposable income at the end of the month is preferable than paying the mortgage. Being able to eat in a warm rented house literally looks better than starving and freezing in a house with an underwater mortgage.
12 posted on 02/10/2010 8:54:58 PM PST by lmr (God punishes Conservatives by making them argue with fools.)
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To: Nachum
Click Here for this video.



You won't believe the sweetheart deal that the Indymac boys were given by the FDIC.

What a racket!

13 posted on 02/10/2010 8:55:24 PM PST by B-Cause (Don't pick a fight with an old man. If he is too old to fight, he'll just kill you.)
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To: Nachum

Not so fast!

I’m underwater also...

Because the bank compared my home to a couple of wrecks within a 1/4 mile that are for sale, not sold!

I’m fine and will not give up until I have to!


14 posted on 02/10/2010 8:56:15 PM PST by Randy Larsen ( BTW, If I offend you! Please let me know, I may want to offend you again!(FR #1690))
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To: Randy Larsen

My daughter and hubby bought in 2007 when prices were headed down. Unfortunately, they continued down drastically more. They put $20K down and right now they are still just over $100K upside down. They can make the payments, but my son in law is being transfered out of the area. They can’t sell and can’t rent it for the payments. What the hell do they do?


15 posted on 02/10/2010 9:08:45 PM PST by umgud (I couldn't understand why the ball kept getting bigger......... then it hit me.)
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To: umgud

If your daughter and son in law live in a state with no recourse laws, such as Arizona, they walk away. It will hit their credit score for a few years and after that they’ll be fine. Housing prices are going to continue to drop anyway.


16 posted on 02/10/2010 9:11:44 PM PST by phoenix07
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To: Nachum

Report: 1 in 5 U.S. homeowners underwater
That headline is a lie.
1 in 5 homes with a mortgage may be underwater, but there are a whole lot of homes with no mortgage that are owned free and clear.
Last clear number I could find was 38% have no mortgage
so that number should be 1 in 9. Still not good but not 1 in 5. Question everything.


17 posted on 02/10/2010 9:13:57 PM PST by calljack (Sometimes your worst nightmare is just a start.)
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To: calljack

oops 1 in 7 or 8 is closer never did like math


18 posted on 02/10/2010 9:15:20 PM PST by calljack (Sometimes your worst nightmare is just a start.)
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To: umgud

Walk away!

My son and dil got talked into a BS deal by dil parents against my protestations.

Turned out that the deal was to help her parents friends, not the kids.

My son is going to get beat up, but they had to so they could save their marriage!

They will be fine when the dust settles...I HOPE!


19 posted on 02/10/2010 9:21:21 PM PST by Randy Larsen ( BTW, If I offend you! Please let me know, I may want to offend you again!(FR #1690))
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To: television is just wrong

The numbers I’ve seen are double that ... they may have fudged things by taking a percentage of all homes ,, about half of all US homes are paid off.


20 posted on 02/10/2010 9:35:43 PM PST by Neidermeyer
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To: dawn53

If you bought near the top in 2005/6 with 25% down and you have seen a 55% drop in valuations as is the case in Florida you will make payments for 16 more years before you get back to owing what the property can sell for (19 years from origination) ,, or 18 years to make up for the expense of a realtor.

You can pack your bags and rent for half or less in a better house in the same neighborhood in many cases (”musical chairs” anyone?). You are eventually going to fail on the original mortgage anyway if you have to move for a job or some other reason and can’t make a short sale work..


21 posted on 02/10/2010 9:42:55 PM PST by Neidermeyer
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To: umgud

Why cant they sell? A short sale should work.


22 posted on 02/10/2010 10:02:19 PM PST by freespirited (Congratulations Senator Brown. One down, 59 to go.)
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To: ExtremeUnction
It only matters if you have to sell.

But slowly, over time many of these folks will need to sell. Death, bankruptcy, divorce..all will cause a forced sale. These forced sales will continue to keep prices down..for a long time.

But over time these home values will recover too. This is a short-term problem.

23 posted on 02/10/2010 10:15:40 PM PST by Ramius (Personally, I give us... one chance in three. More tea?)
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To: Ramius

Depends on what you mean by ‘short term’.

Housing is still 50 percent overpriced. Assuming 3 percent appreciation, the decline hasn’t quite brought prices down to their historical rates.

You are right that in the long run, in 10 years or so, that the prices will increase, but that is a long time to watch your equity vanish.

Personally, I’d buy the house and rent it out even if rent failed to cover the entire mortgage. Yes, it’s


24 posted on 02/10/2010 10:40:43 PM PST by BenKenobi (;)
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To: Neidermeyer

It’s a tough decision for these young couples I know. They have actually been advised by the banks, that they won’t even talk to them about renegotiating a loan, etc. unless they have missed 6 months of payments.

Sounds like a catch 22. Miss the payments, and they might foreclose; don’t miss the payments and you can’t renegotiate w/the bank.


25 posted on 02/11/2010 3:25:37 AM PST by dawn53
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To: Nachum

One of the problems of being upside down has been reported that a bank can ask for more cash to cover the losses. In other words, the house is the collateral backing the loan, but if that collateral becomes worth lesss than the loan amount, the bank can ask for more collateral or cash.


26 posted on 02/11/2010 8:34:12 AM PST by CodeToad (If it weren't for physics and law enforcement I'd be unstoppable!)
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To: freespirited

Why cant they sell? A short sale should work.
***************************************************
Short sales don’t work for 3 major reasons ...

1.) the bank makes more ... MUCH MORE if you default with their insurance in the form of credit default swaps.
2.) the servicer is often the only contact for the borrower , the servicer is very often unable to determine the owner of the note ,, it is a REAL PROBLEM , not just a cute legal question ,,, only the owner of the debt can OK a short sale .. if you can’t find them you have nothing.
3.) assuming you have a loan with a local bank and have a face to face and get a short sale approved it often takes a lot of time and by then the short price is still too high for a sale to occur.

Basically you’re banging your head against the wall ... if you’re in a non-recourse state give them the house back or stop paying and fight them for it.


27 posted on 02/11/2010 3:28:37 PM PST by Neidermeyer
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