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This is not significant. Mortgages that are “under water” or upside down are not as critical as:

Percent or number of:
- mortgages that continue to be paid on time
- mortgages in arrears
- foreclosures

This is very much like saying “Nearly half of US homes have a roof that will be 15 years old in 2011”. Perhaps a factual detail but it does not allow us to observer cause and effect in the market. It only allows speculation and FUD.

And to that end, becomes an “anyman” tool to argue for any kind of action or inaction. For example, a dim could argue for the need for another TARP bailout. A republican might argue that it is evidence the TARP bailout is not working.

The only “solution” that is being pushed right now is attempting to put some of these people into FHA backed loans that are going for around 5.25%, for now.

The catch is that there are enough people who are in dire financial straits that they do not qualify for even an FHA loan. The interest rate increases as the credit scores go down, and because property values have been slashed across the board, even the tax value on many properties is way overstated.

If you try to qualify and re-finance right now, you may get a lower interest rate, but you will also pay one year’s worth of FHA Mortgage Insurance up front, and depending on the size of your loan, an additional non-deductible mortgage insurance premium along with your monthly mortgage and escrow payment.

In addition, most borrowers who need this the most do not qualify for the lower interest rate, so they are given the “option” of “buying down” the interest rate by paying enormous bank fees and/or “points” up front. If you roll those fees into your current loan, it could easily wipe out several year’s worth of additional acquired equity in your home, and increasing the length of time you will be stuck with those insurance premiums. The only way to get rid of the Insurance is to retain in excess of 22% equity in your home, and even then you may well have to re-finance your house all over again to get rid of it.

The Administration and the Democrats are out bragging about how much help they are giving to Americans who are losing their homes, but it is stories like this one that bare that outrageous Obama lie for those who still have eyes to see...

This is not significant. Mortgages that are “under water” or upside down are not as critical as:
Percent or number of:
- mortgages that continue to be paid on time
- mortgages in arrears
- foreclosures

Although the things that you list are certainly worse, upside down mortgages are very significant. The problem that we have with 50% of mortgages being upside down is that it makes the workforce inflexible. People cannot move to get a new or better job. The economy is still shedding jobs like leaves in October and a lot of good people who put their 20% down and pay their bills on time have and will lose their jobs. They are then stuck in the regional job market where they are because they cannot afford to sell their home. It is particularly bad in the dozen or so states where home values are down 20-40%. There are parts of the country where the economy is quite strong. It would behoove an unemployed person with ambition to pack up his family and move there. Being saddled with $100K in upside downedness puts a quick end to that thought.