Plummeting house values put record amount of mortgages under water

It’s estimated that a record number of individuals are now under water on their home loans due to dropping house values. The plunging home values have been exacerbated by increased numbers of foreclosures, high joblessness and tighter credit. Values could continue to fall.

Underwater mortgages all over the country

Home prices have been plummeting for the past few years during the recession. There has been a higher unemployment, fewer homes sold and more foreclosures. This has brought on an even lower house value recently. It is called being under water on a mortgage when more money is owed on a home than it’s worth. Currently, 27 percent of American homeowners face this issue, Bloomberg reports. About 15 million house loans are under water, according to Zillow. Zillow is a real estate information company. Since September 2010, home prices have gone down about 3 percent while going down 6 percent in the last year. Values are anticipated to decline 5 percent more in 2011.

Change in foreclosures

Because several have hoped the real estate sector would recover again, many have pointed to the slowing rate of foreclosures. A decrease in foreclosures occurred in January, but that does not mean that the crisis is over, according to CNN. Because of the “robo-signing” scandal, where foreclosures were initiated by banks without reviewing the paperwork, the foreclosure process has been held up. The number of homes and private loans foreclosed on will likely increase once the backlog of foreclosure cases in courts and at loan providers is reduced.

Areas with inflated value still reeling

The foreclosures are making things really hard in locations that have real estate values every high. Nevada, Arizona and California nevertheless lead the nation in foreclosure-affected states. Florida, though, has started to improve, dropping to ninth place nationally in foreclosure rates.

Information from

Bloomberg

bloomberg.com/news/2011-02-09/home-price-decline-leaves-27-of-u-s-owners-underwater-on-loans.html

CNN

http://money.cnn.com/2011/02/10/real_estate/foreclosure_filings_fall/