Zillow: Number of underwater borrowers growingby Tim Manni
It’s not as though I expect the underwater crisis to go away anytime soon, but I have to admit that I’m still a little surprised when I hear the number of underwater borrowers is growing. Perhaps I’m most shocked that Washington still hasn’t designed a meaningful program to help these borrowers refinance to today’s low mortgage rates.
From the Wall Street Journal:
In the U.S., 23.2% of U.S. mortgage holders were underwater, owing more money than the house is worth. That’s up from 21.7% from a year ago, according to Q03 data out Wednesday from Zillow.com. Roughly 13.9 million homes now have negative equity. Many of these homes could end up in foreclosure should borrowers give up making payments on homes that aren’t worth what they owe—let alone building equity.
Some economists expect there’s more to come—into 2011. “One-quarter of homes [with mortgages] with negative equity is a huge number, but I don’t believe this will hit bottom until June or July,” says Cameron Findlay, chief economist at LendingTree.com. He projects that average homes prices could drop another 4% from now before they bottom out.
Thinking about walking away?
Walking away from your home loan shouldn’t be a decision that’s made overnight, and you should know that the process won’t be short and simple. Strategic defaults can come with a host of short- and long-term repercussions, including some of which you might not be aware of. I have compiled a list of both the pros and cons to walking away from your mortgage. It’s essential for you to be aware of both before you consider a strategic default as the solution to your problem.
Be sure to check out my article “The pros and cons of walking away from your mortgage.”