Fewer underwater mortgages may help some stop foreclosure
As Florida homeowners know all too well, many families are currently facing foreclosure and other financial challenges as a result of the sudden drop in home prices that occurred in recent years. Home purchases that once seemed like sound investments quickly turned into financial liabilities as thousands of homeowners found themselves owing more on their mortgage loans than the properties were worth. And while there is evidence to suggest that Florida is among the states hardest hit by such unstable housing market conditions, new figures also point to the fact that slow progress is being made in the direction of market stability.
When the value of a home is estimated to be less than the mortgage loan on the property, it is commonly referred to as an upside down or underwater mortgage. Looking at third quarter figures for 2013, one data analysis group estimates that the number of underwater mortgages around the country has decreased notably since the previous quarter. In the second quarter of the year, almost 15 percent of mortgaged home properties had negative equity.
One factor that seems to be contributing to the decrease in underwater mortgages is that home prices across the nation are on the rise. Homeowners, therefore, are beginning to recuperate some of their homes’ value and gaining equity as a result. Unfortunately, however, recent figures also suggest that homes worth $200,000 or less are recovering equity more slowly than others.
It is also estimated that the state of Florida, and two specific regions of the state, continues to flounder under underwater mortgages. Joining states like Nevada, Arizona, and Ohio, almost 30 percent of Florida mortgages were upside down at the close of the third quarter of the year. That’s in comparison to underwater mortgages across the nation, which stood at approximately 13 percent.
Source: Forbes, “Study Finds 6.4 Million U. S. Homeowners Still Have Underwater Mortgages,” Erin Carlyle, Dec. 17, 2013