More Homeowners Expected to Be Underwater on Mortgages in 2009

[Dec 19, 2008.]

 

About 12 million homeowners owe more on their mortgage loans than their house is worth, almost twice the number at the end of 2007. Economy.com predicts that number will rise to around 14.6 million next year as home values are expected to fall another 10%.

Some states have been hit harder than others. About 50% of all homeowners in Louisiana are underwater on their mortgages and 18% are underwater in California. According to the Wall Street Journal, half of homeowners who are underwater on mortgage loans owe more than 120% of the value of their homes.

Many of those homeowners continue to be stuck in homes that they can’t sell due to falling housing values and the credit crunch. Some areas that have been hit the hardest by falling home values also have high rates of unemployment. Negative home equity is also hurting people who have the opportunity to relocate for a better job. According to a survey of companies conducted by Atlas Van Lines, “family ties” was the main reason (65%) that workers declined to relocate for a job. About 50% of companies surveyed said people told them they were turning down relocation offers because of “housing and mortgage concerns.”

People who have the chance to relocate for work should negotiate for as big of a relocation package as they get. Some things to ask for include help with moving expenses and rent down payments, a lump sum of cash, and the possibility of telecommuting, even if it’s only temporary.

Those who are desperate to sell their home need to pull out all the stops. In some cases mortgages lenders are willing to work out a short sale deal if people are able to document their financial hardship and line up a buyer ahead of time. In other cases, homeowners may be able have the terms of their mortgage loan modified to help make payments more affordable.

 

 

 

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.