11.3 million homeowners underwater on mortgage

MarketWatch ^ | Feb. 23, 2010 | Rex Nutting,

[george76]

More than 11.3 million homeowners -- nearly one-fourth of all Americans with a mortgage -- owe more on their loan than their home is now worth...

More than 10% of people with mortgages owe 25% more than their home is worth.

The number of underwater mortgages increased by about 620,000 from the third quarter... Another 2.3 million mortgages had less than 5% equity in their home, which could be wiped out if home prices fall further.

Underwater mortgages are concentrated in few states: California, Florida, Nevada, Arizona, Michigan and Georgia. In Nevada, 70% of mortgages were underwater. In California, more than a third of mortgages were underwater.

[longtermmemmory]

all forclosure and bankruptcy law is premised on the notion that primary residence property will remain steady and hold or improve value. The pre-2005 bankruptcy reform even envisioned the only way to have 100%+ lien on a home is via fraud or churning of financing.

The banks were pushing the future increase in home prices and essentially telling buyers that the price will not go down but will go up. You HAD to use one of the bank’s appraisers (ie Bank of America had a list appraisers you HAD to use or you would not get the loan)

in most situations it was CHEEPER TO BUY than it was to rent.

There were no angels.

HOwever it has to be noted that the bank got exactly the security they sought and gave.