Report: 1 in 5 Homes Still Underwater

For all the talk of economic improvements, it’s worth pointing out that, according to the latest figures from Zillow, 1 out of every 5 homes in the country is still underwater. graphs.jpg

These are homes where the owner has negative equity, meaning the borrower owes more on the mortgage than what the property is worth.

Our Miami foreclosure defense attorneys know that in Florida, the figures are worse. Where the national negative equity rate is 19.4 percent, in Broward County, it’s 25.3 percent. Granted, that’s lower than the 39.1 percent it was at last year, but it’s still more than 30 percent higher than the national rate.

In Palm Beach County, about 24.4 homeowners are underwater in the fourth quarter of 2013, compared to 37.1 percent at the same time in 2012. Of those 60,500 underwater mortgages in Palm Beach County, more than 20 percent involve borrowers who owe double what the home is actually worth.

The vast majority of these property owners either purchased or refinanced their home sometime between 20054 and 2006, at the height of the bubble, only to see those values plummet in the wake of the housing market crash.

Now, these homeowners are stuck. Many can’t sell without bringing money to the table. That usually means that absent a successful home loan modification, they are left with the option of a short sale or a foreclosure.

In order to successfully complete a home loan modification, an experienced attorney should represent your interests. Banks and mortgage servicers in recent years have garnered a reputation for undermining loan modification efforts, either through dual tracking or simply employing shoddy business practices that slow or derail the process. Attempting to battle this out on your own can be incredibly frustrating. Lenders want you to give up. They benefit when they can take the house back. We fight to make sure that doesn’t happen.

One bit of good news is that housing prices are on the rise, so this does give borrowers a bit more leverage in the situation.

Nationally, the negative equity rate has been falling for seven consecutive quarters. It dropped from 27.5 percent in the fourth quarter of 2012 to 21 percent in the third quarter of 2013 and then down to 19.4 percent.

There are those who have hailed this as a breakthrough, as it means that nearly 4 million people who were underwater are no longer. Of course, many of those are no longer underwater because their homes were lost to foreclosure. And we still have 1 out of 5 who are at risk of losing their homes, and the appreciation of home values is slowing. While it increased by about 6.6 percent in 2013, Zillow Home Value Forecast estimates it will grow by just 3.5 percent over the next year.

Unfortunately for many folks, these increases doesn’t make up for the magnitude of the severe declines we saw as a result of the housing market crash. Consider that in Broward, the median home price as of July 2013 was $275,000. That was up 28 percent from a year earlier. However, it’s still 30 percent lower than its peak price of $391,100 in the fall of 2005.

We’re not likely to see prices bounce back to the levels, which means homeowners who are still treading water would do well to seek mortgage loan modification assistance if they wish to avoid foreclosure.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.

Additional Resources:
Underwater mortgages drop by 1.3 million. How much could that boost the economy? Sept. 17, 2012, Miami Foreclosure Lawyer Blog
Underwater mortgages still a drag on housing market, Sept. 7, 2013, By Paul Owers, Sun Sentinel
1 in 5 homeowners still underwater at year’s end, Feb. 28, 2014, By Trey Garrison, Housing Wire
More Blog Entries:
Homeowner Loan Complaints On the Increase – Again, Feb. 26, 2014, Miami Foreclosure Lawyer Blog