1 Out of Every 6 Homeowners Owe More Than Their Home is Worth

This article I found has some very useful and valuable information for homeowners in distress.

Thornwood NY – The country was stung by more alarming housing news while making their morning commutes. The Wall Street Journal reported this morning that of the 75.5 million U.S. households that own their home, an astounding 1 in 6 of them are underwater on their mortgage, meaning that they owe more than their home is actually worth.

This statistic leads many industry experts to believe that the foreclosure crisis is only going to get worse. When a homeowner owes more than their home is worth, it’s difficult to refinance in any market. And it’s virtually impossible to refinance in the current environment where credit markets have tightened considerably and loan restrictions are stringent.

Should any of those 12.5 million people underwater need to refinance because they have loans that are adjusting to higher rates, they are going to join the millions of other Americans who face tough choices like paying a (sometimes significantly) higher house payment, selling their home, or going into foreclosure.

So far this year, lenders have repossessed a record 656,545 properties nationwide – or 8.6 of every 1,000 households in the United States – and remain on track to repossess more than 1 million nationwide by year-end, ForeclosureS.com reported.

Year-to-date 1.45 million homeowners (19.6 of every 1,000 households) faced pre-foreclosure actions by lenders, almost double the number a year ago.

U.S. home values in the second quarter posted the largest year-over-year decline in the past 12 years, according to Zillow Real Estate Market Reports. The median U.S. home value has not been this low since the fourth quarter of 2004, leaving nearly one-third (29.1%) of homeowners who purchased since 2003 with negative equity.

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