Underwater Mortgages Hurting Everyone
This year alone, our banks have been lending more to European companies to the tune of $18 Billion. Compared to all of 2011 – that’s up more than 115%.
You may not think this bit of news is serious, but it is. Lending more to European companies leads to the U.S. fearing new and more bailouts. Just look at the falling stock market. We are currently stumbling as a consequence of the housing bubble. Bailing out companies, executives and shareholders would, at the very best, extend our economy’s recovery process. Japanese politicians made the same mistakes in the 1990’s suffering a long decline that remains in effect even today as Japan is still, well below their peak level.
Banks continue to pull back on lending to homeowners. One of the biggest obstacles is the fact so many homes are underwater. An underwater home is a home that’s worth less than what the homeowner owes on the mortgage.
Home sales are hurt by underwater mortgages. The homeowner can’t sell without taking a loss, and banks generally won’t accept a short sale. Banks are demanding higher down payments making it difficult for people to sell their homes and for others to buy.
Nearly 1/3 of mortgaged homes in the U.S. are underwater. The worst states in the country are Nevada, Arizona, Florida, Michigan and California. Oklahoma has the least amount at 5%. Nearly 2/3 of Nevada’s homes, and nearly 50% of Arizona’s homes are underwater. Very alarming, and not getting better.
Colorado comes in twelfth in the nation with 21% of its mortgages underwater. The number of homes underwater in Colorado is almost a quarter of a million with a value over $9 billion. In the nation, more than 11.1 million Americans own homes that are underwater.
Few families will ever be able to pay off their inflated mortgages. Many will default. As long as this $700 billion in underwater mortgages remains on the over 11.1 million Americans, foreclosures will continue to increase, the housing market will continue to struggle and the economy will either grind to a halt and stall, or fall.
Keith A. Gantenbein, Jr. is a Colorado foreclosure defense attorney located in Denver and servicing all of Colorado. He also handles bankruptcies, mortgage negotiations, lender liability, real estate, civil litigation, contracts and landlord/tenant. If you think you will be facing foreclosure, or are in the foreclosure process, or have had a wrongful foreclosure, contact Keith Gantenbein at (303) 618-2122 for a one-hour consultation where he will discuss your situation and go over all your options with you.
This article is not intended as legal advice. The opinions of this article are solely the opinion of the author.