The Cost of Not Walking Away From An Underwater Mortgage

In the ongoing debate about whether one should walk away from an underwater mortgage or not, one University of Arizona professor speaks out strongly in favor of taking a hike. According to Brent T. White, an associate professor of law at the University of Arizona:

A failure to grasp the true economics of the situation is holding back many Americans whose home values have dropped far below the amount they owe and who would be better off renting, Mr. White says. Fear, shame and guilt also are preventing rational decisions, he believes. And, he says, those “emotional constraints” are encouraged by politicians and bankers, who ruthlessly and amorally follow their own economic interests while telling Joe Soggy Homeowner he has a moral duty to pay his debt so long as he possibly can. Continue reading “The Cost of Not Walking Away From An Underwater Mortgage

St. Louis Real Estate News: Over 15 percent of St Louis homeowners with a mortgage are underwater

Dennis Norman
Dennis Norman

According to a report released today by First American CoreLogic nearly 10.7 million U.S. mortgages, or 23 percent of all mortgaged properties, are in a negative equity position meaning the borrowers owe more on their mortgage than their home is worth as of September 30, 2009.  firstamerican corelogic

 

 

Here in St. Louis, as of September 30, 2009, there were 87,557 homeowners in St. Louis that were “underwater” on their mortgage, meaning they owe more than their home is worth.  This works out to 15.14 percent of the homeowners in St. Louis with a mortgage, so about 2/3 of the national rate.

If you read my post about CoreLogics 2nd quarter Continue reading “St. Louis Real Estate News: Over 15 percent of St Louis homeowners with a mortgage are underwater

Almost thirty percent of mortgages in St. Louis are underwater

Dennis Norman
Dennis Norman

According to a report issued by First American CoreLogicmore than 15.2 million U.S. mortgages, or 32.2 percent of all mortgaged properties, are in a negative equity position. In addition, according to the CoreLogic report, there are an additional 2.5 million mortgaged properties that are approaching negative equity. Negative equity and near negative equity mortgages combined account for nearly 38 percent of all residential properties with a mortgage.

firstamerican corelogic
The numbers for St. Louis are a little better than the U.S. numbers. In St. Louis, 170,871, or 29.50 percent of all properties with a mortgage, are in negative equity. A total of 208,259 mortgages, or 35.95 percent, are in near negative equity or negative equity.
The total property value of the property in St. Louis that is at risk of default is over $26.5 billion. By comparison in Chicago there is $134 billion of property at risk of default and $310 billion in Los Angeles.
Negative equity, often referred to as “underwater” or “upside down”, means the borrower owes more on their mortgage than the home is worth. Near negative equity is when mortgages are within five percent of being in a negative equity position. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.